BWV member ? Taxes Possible on rent points income

[chelsea]

I have rented my points on a number of occasions. I am thinking of buying more points as an investment. I am also wondering if I should be declaring this income. If I do that, can Disney at some time in the future make changes to our ownership that will not allow it any more.

 

[Deb & Bill]

From the Multi-Site Public Offering (Rev 7/2001) "Ownership interests are offered for personal use and enjoyment only and should not be purchased by any prospective purchaser for resale or as an investment opportunity or with any expectation of achieving rental income, capital appreciation, or any other financial return or valuable benefit, including any tax benefit."

 

[TnRobin]

As for is it taxable. The IRS would say YES.

 

[dvcdenise]

It is only taxable if you rent more than 14 days a year. That us the tax code. If you rent 14 day or less than you do not need to declare any of it, more than 14 day you must declare as rental propery.

 

[CarolA]

The 14 day policy is for Second homes. I am NOT 100% sure that the IRS would allow this since you did not buy 100% ownership in the property, but a portion.

My first reaction based on my 20 year old tax class is that this could easily become taxable. You would do best to talk with a tax accountant with experience.

Your other concern is that if Disney catches you they could probably take legal action which could include revoking your membership. An occasional rental is not going to attract their attention. Lots of rentals start running up the risk.

 

[TnRobin]

The 14 day rule only applies to your "Home." You have to meet certain requirement for a timeshare to be considered a "home" If it does not meet the definition then it is income.

IRS Publication 527 details the 14 day rule for you.

 

[CarolA]

I just scanned this and I have a CPA and studied Tax and all I can say is I would still consult an expert! It could be very hard to claim this as a second home and the rental income as "casual income" not subject to taxes.

The 14 day rule mentioned above applies to a dwelling used as a "Home". Trying to convince the IRS that DVC is a "home" (even if we think of it as home) looks to me like it would be a hard sell!

 

[drusba]

As to taxable I would check with an accountant. As to some other issues:

Disney could not make changes in the future as to the rights you already have to rent. However, Disney already does have a vague limitation in the disclosure documents you received as to renting in that renting for commercial purposes is prohibited and that repeated renting can be considered a commercial purpose. Thus, Disney would not need to change the rights you have, it would only need to exercise the limitation it placed on those rights at the time of sale to you. Basically, Disney does not desire that people buy simply for the purpose of going into the business of renting points and that is likely the reason for the limitation. Where do you cross the line between (a) being an owner who rents occassionly or rents out some points to cover dues and make a little money but mainly has points for personal use, and (b) being in the business of renting is not clear. Disney's vague limitations may have something to do with vague statutory terms in Florida which require someone "in the business" of renting hotel and resort property to charge the Florida and county rental taxes (11% to 12% in WDW) and submit such to government authorities; in other words there is some point, not clearly defined, where you could be considered to be in the business of renting and thus must charge those rental taxes or possibly face fines or other penalties.

 

[TnRobin]

Carol - I see you are in Nashville - I work in Nashville too as a CPA. Small World.