Called about buying VGF direct and only Feb use year for sale

[crvetter]

Sorry, I forgot that 75 would be your 'master contract' and the minimum direct is 100 right now. The 100 and 50 split would still be beneficial to you if you ever wanted to sell some points off. You could always sell the 100, keep the 50, and never be told you need a minimum 100 point purchase (or whatever it is at the time) since you are already a member. The closing cost is minimal in the grand scheme of things.

I was fortunate with the original guide I was assigned. He "retired" over COVID and IDK who was assigned to me. I blindly reached out to another guide a friend said was easy to deal with and as soon as I spoke with him on the phone I got an email that my guide was switched. You can absolutely switch, but it could be from pan to the flame... possibly even worse? Getting "manager" approval or dealing with your guide's manager may be the best way to go for now if you get the Oct UY, 100/50 split, and whatever financing or payment plan you want. You can always pick a new one based on WOM and/or a visit to WDW.


I believe even if the 50 points were sold membership extras would be lost. DVC is selling 100 minimum, but 150 direct is still required for membership extras as of 6/3/21.

"Important Information about Membership Extras:
Membership Extras, such as exchange options in the Disney Collection and options offered through hotel exchange, certain discounts, offers, and special events are incidental benefits. These incidental benefits are subject to change or termination without notice, may require the payment of a fee and cannot be combined with any other offers or promotions. Membership Extras are also subject to availability and block-out dates may apply, including high periods of demand such as Christmas and New Year’s Day. To receive any Membership Extras, purchasers must present a valid digital Disney Vacation Club Membership Card along with a corresponding valid photo ID. Effective June 3, 2021, to obtain a Disney Vacation Club Membership Card, Members must accumulate a total of at least 150 Vacation Points purchased directly from Disney Vacation Development, Inc. Exchange options in the Disney Collection and options offered through hotel exchange are not available for ownership interests not purchased directly from Disney Vacation Development, Inc. after March 21, 2011, and, effective April 4, 2016, Members who have not purchased an ownership interest directly from Disney Vacation Development, Inc. will not have access to Membership Extras."

We both said the same thing.

 

[PolyRob]

We both said the same thing.

Sorry, I interpreted what you wrote as you could sell the 50, keep the 100, and retain membership extras since DVC is selling 100 point contracts. My bad!

 

[miTnosnhoJ]

If I had to guess what is going on (unencumbered by actual knowledge)…

They can sell you any use year you want…

Except they are running a “sell the sleeves out of their vest” promotion (I think they call it Magical Beginnings”) which involves selling you points that you will turn over to them to reduce your purchase price. Let’s say you have a February use year. They can take the Feb 2023 points from you and have plenty of time to rent them out to a hotel guest before they expire next January. And you will get new points in February 2024, so if your first trip isn’t until then, you may not even notice that you gave them several thousand dollars worth of 2023 points. And if you need to make a trip this year, they will help you borrow from your 2024 points. You have to pay taxes on the “rental” of your points back to Disney, by the way.

Now, if you get your desired use year of October, they get your 2022 points. They only have until the end of September to sell your points to a hotel guest. And if you pay in installments, they have even less time. So October is a good deal for you, but a bad deal for them. They could try to talk you out of your 2023 points so you get the big discount, but then the delay before you can take your first trip becomes really noticeable.

 

[crvetter]

Sorry, I interpreted what you wrote as you could sell the 50, keep the 100, and retain membership extras since DVC is selling 100 point contracts. My bad!

No worries, I think it was good to clarify, my wording was not clear.

 

[PinkPixel]

Sorry, I forgot that 75 would be your 'master contract' and the minimum direct is 100 right now. The 100 and 50 split would still be beneficial to you if you ever wanted to sell some points off. You could always sell the 100, keep the 50, and never be told you need a minimum 100 point purchase (or whatever it is at the time) since you are already a member. The closing cost is minimal in the grand scheme of things.

I was fortunate with the original guide I was assigned. He "retired" over COVID and IDK who was assigned to me. I blindly reached out to another guide a friend said was easy to deal with and as soon as I spoke with him on the phone I got an email that my guide was switched. You can absolutely switch, but it could be from pan to the flame... possibly even worse? Getting "manager" approval or dealing with your guide's manager may be the best way to go for now if you get the Oct UY, 100/50 split, and whatever financing or payment plan you want. You can always pick a new one based on WOM and/or a visit to WDW.


I believe even if the 50 points were sold membership extras would be lost. DVC is selling 100 minimum, but 150 direct is still required for membership extras as of 6/3/21.

"Important Information about Membership Extras:
Membership Extras, such as exchange options in the Disney Collection and options offered through hotel exchange, certain discounts, offers, and special events are incidental benefits. These incidental benefits are subject to change or termination without notice, may require the payment of a fee and cannot be combined with any other offers or promotions. Membership Extras are also subject to availability and block-out dates may apply, including high periods of demand such as Christmas and New Year’s Day. To receive any Membership Extras, purchasers must present a valid digital Disney Vacation Club Membership Card along with a corresponding valid photo ID. Effective June 3, 2021, to obtain a Disney Vacation Club Membership Card, Members must accumulate a total of at least 150 Vacation Points purchased directly from Disney Vacation Development, Inc. Exchange options in the Disney Collection and options offered through hotel exchange are not available for ownership interests not purchased directly from Disney Vacation Development, Inc. after March 21, 2011, and, effective April 4, 2016, Members who have not purchased an ownership interest directly from Disney Vacation Development, Inc. will not have access to Membership Extras."

very good info thank you.

 

[PinkPixel]

If I had to guess what is going on (unencumbered by actual knowledge)…

They can sell you any use year you want…

Except they are running a “sell the sleeves out of their vest” promotion (I think they call it Magical Beginnings”) which involves selling you points that you will turn over to them to reduce your purchase price. Let’s say you have a February use year. They can take the Feb 2023 points from you and have plenty of time to rent them out to a hotel guest before they expire next January. And you will get new points in February 2024, so if your first trip isn’t until then, you may not even notice that you gave them several thousand dollars worth of 2023 points. And if you need to make a trip this year, they will help you borrow from your 2024 points. You have to pay taxes on the “rental” of your points back to Disney, by the way.

Now, if you get your desired use year of October, they get your 2022 points. They only have until the end of September to sell your points to a hotel guest. And if you pay in installments, they have even less time. So October is a good deal for you, but a bad deal for them. They could try to talk you out of your 2023 points so you get the big discount, but then the delay before you can take your first trip becomes really noticeable.

Interesting about the points being rented, (receiving a payment for them and it being a tax liability). I'm still confused on how the dues on the 2022 rented back points would work, is that rolled into the full purchase or billed seperately? Are they able to bend rules to let me bank the 2022 instead for spring 2024 trip instead?

 

[Sandisw]

Interesting about the points being rented, (receiving a payment for them and it being a tax liability). I'm still confused on how the dues on the 2022 rented back points would work, is that rolled into the full purchase or billed seperately? Are they able to bend rules to let me bank the 2022 instead for spring 2024 trip instead?

Dues are based on calendar year, and not UY. Buying in 2023 means you pay prorated dues frpm the day you sign the contract

So, buying today, you would pay 6 months of dues for 2023, regardless of what UY your contract is.

 

[achinforsomebacon]

You have to pay taxes on the “rental” of your points back to Disney, by the way.

This is debatable. Most people seem to view Magical Beginnings as a rebate and not taxable (Disney calls it a "cash rebate"). This is not tax advice. Just an observation.

Now, if you get your desired use year of October, they get your 2022 points. They only have until the end of September to sell your points to a hotel guest. And if you pay in installments, they have even less time. So October is a good deal for you, but a bad deal for them. They could try to talk you out of your 2023 points so you get the big discount, but then the delay before you can take your first trip becomes really noticeable.

If you do Magical Beginnings with October points, they would still have over a year to use them for cash guests. They would just bank them into 2023, just like they would bank them late for you if you didn't do Magical Beginnings, and have until September 30, 2024 to use them.

 

[achinforsomebacon]

Are they able to bend rules to let me bank the 2022 instead for spring 2024 trip instead?

Yes, they should allow you to bank the 2022 points late when buying direct if you chose to not do Magical Beginnings. I haven't heard of anyone being denied this but it should be confirmed with your guide. Then you would have until September 30, 2024 to use them along with your full allotment of 2023 points that could be used or banked into 2024.

 

[Genie+]

You have to pay taxes on the “rental” of your points back to Disney, by the way.

I don’t think that is correct. It is a developer rebate for those points. Basically the buyer is buying a one year shorter contract. No renting is going on in this transaction.

 

[mkatsy]

I don’t think that is correct. It is a developer rebate for those points. Basically the buyer is buying a one year shorter contract. No renting is going on in this transaction.

Unfortunately, no, they give you the 2022 points. You purchase them, and they load them on your dashboard, you own them. Then, the next day, they remove them and send you a check in the mail. The tax advantage goes to Disney because they can write off the price they paid you ($22 point) as "cost of goods sold" and then rent them out 'one time use' at ($24 point). A true rebate would occur if I got to keep my points, and then Disney sent me a check in the mail after the sale. This is just a coupon that is occurring after the sale. That's why Disney has to load the Magical Beginning points onto your dash, so that a transaction occurs when they take them back. That transaction is income.

 

[DanCali]

Now, if you get your desired use year of October, they get your 2022 points. They only have until the end of September to sell your points to a hotel guest. And if you pay in installments, they have even less time. So October is a good deal for you, but a bad deal for them. They could try to talk you out of your 2023 points so you get the big discount, but then the delay before you can take your first trip becomes really noticeable.

That makes sense but if they can make exceptions for certain owners (like banking points after deadline in order to close a sale) then they must also be able to make exceptions for themselves, no?

In their own rules, they generally allow you to do Magical Beginnings until 3-4 days before the end of the use year. In such cases, I assume they would just bank those points for themselves into next year?

 

[Epcot Forever Forever]

You have to pay taxes on the “rental” of your points back to Disney, by the way.

I don’t think that is correct. It is a developer rebate for those points. Basically the buyer is buying a one year shorter contract. No renting is going on in this transaction.

I guess we’ll see when people get - or don’t get - some hefty 1099s in January.

 

[DanCali]

I guess we’ll see when people get - or don’t get - some hefty 1099s in January.

It's not rental income. It's a reduction in the cost basis of the ownership. The MB form advises of that aspect.

So you will realize a smaller loss (or, less likely, a larger gain) when you sell.

 

[mkatsy]

It's not rental income. It's a reduction in the cost basis of the ownership. The MB form advises of that aspect.

So you will realize a smaller loss (or, less likely, a larger gain) when you sell.

View attachment 775825

Sorry, I disagree with you. If you think of a contract as a set of individual use points and think of Magical Beginnings as selling the 2022 individual use points back to Disney, then of course Magical Beginnings would reduce your cost basis of ownership. You sold a piece of the set; therefore, the value of the original set has decreased.

 

[DanCali]

Sorry, I disagree with you. If you think of a contract as a set of individual use points and think of Magical Beginnings as selling the 2022 individual use points back to Disney, then of course Magical Beginnings would reduce your cost basis of ownership. You sold a piece of the set; therefore, the value of the original set has decreased.

I guess we are not disagreeing that it's a reduction in the cost basis, but you are saying that it's rental income as well?

You're getting money in your pocket. Some in prior posts have argued it's rental income (you paid full price, but rented first use year points to Disney). Others have said it's a reduction in the cost basis (as if you just paid $22/point less upfront). It cannot be both a reduction in cost basis and rental income, as that treatment could lead to double taxation (tax on rental income, and higher capital gain tax if you subsequently sold at a profit)

 

[mkatsy]

I guess we are not disagreeing that it's a reduction in the cost basis, but you are saying that it's rental income as well?

You're getting money in your pocket. Some in prior posts have argued it's rental income (you paid full price, but rented first use year points to Disney). Others have said it's a reduction in the cost basis (as if you just paid $22/point less upfront). It cannot be both a reduction in cost basis and rental income, as that treatment could lead to double taxation (tax on rental income, and higher capital gain tax if you subsequently sold at a profit)

sorry again ... but I pulled out my contract and actually read it, for the first time. It is a rental. I purchased 0.0169% interest in Unit 12 of VGF. I did magical beginnings for the 2022 points, and Disney is compensating me $3,300 and I still own 0.0169% interest in Unit 12 of VGF. The contract is sold "whole" and the points are not to be considered individual units in the sale. The points are administrative in nature, and here is the language to support that: "For purposes of administrative convenience only and for no other purpose, PURCHASER's OwnershipInterest shall be symbolized as the number of Home Resort Vacation Points set forth in paragraph 2 above. A Home Resort Vacation Point is a unit of use management designed for use in conjunction with the Home Resort Reservation Component. Home Resort Vacation Points are merely reflective of PURCHASER's Ownership Interest as described herein, and these Home Resort Vacation Points may not be hypothecated, bought, sold, exchanged, rented or otherwise transferred separate and apart from PURCHASER's Ownership Interest." ... the contract stays whole.

 

[Epcot Forever Forever]

Again, if Disney doesn’t sent 1099s for Magical Beginnings, approximately 0% of y’all will declare it on their taxes. Based on what DanCali posted in post 34 it sure as heck sounds like they aren’t planning to do that. So this is a very academic argument.

Perhaps this topic should move to a new thread about taxes on magical beginning.

 

[DanCali]

sorry again ... but I pulled out my contract and actually read it, for the first time. It is a rental. I purchased 0.0169% interest in Unit 12 of VGF. I did magical beginnings for the 2022 points, and Disney is compensating me $3,300 and I still own 0.0169% interest in Unit 12 of VGF. The contract is sold "whole" and the points are not to be considered individual units in the sale. The points are administrative in nature, and here is the language to support that: "For purposes of administrative convenience only and for no other purpose, PURCHASER's OwnershipInterest shall be symbolized as the number of Home Resort Vacation Points set forth in paragraph 2 above. A Home Resort Vacation Point is a unit of use management designed for use in conjunction with the Home Resort Reservation Component. Home Resort Vacation Points are merely reflective of PURCHASER's Ownership Interest as described herein, and these Home Resort Vacation Points may not be hypothecated, bought, sold, exchanged, rented or otherwise transferred separate and apart from PURCHASER's Ownership Interest." ... the contract stays whole.

A reduction in cost basis doesn't mean you own less. I don't disagree with you there. You ownership stays the same. The reduction in cost basis means you bought that ownership interest for $161.10 per point (just like we think about it on this board) and not 183.10 per point which is what you paid up front, before the $3300 rebate.

The two possible arguments are (using 150 points as an example with member incentives):

(1) You paid $183.10 per point ($27,465) and got $3300 in "rental income" for the points they took. If you view it this way, the rental income would be a taxable event in 2023.

(2) You paid $161.10 per point ($27465 -$3300). There is no rental income. But you will pay a higher capital gain tax vs option (1) if you subsequently sell at some point in the future at a price of $190 per point, for example.

As mentioned in my prior post, you cannot double count the $3300 and say it's both rental income and a reduction in cost basis, because of double taxation issues.

To me, Paragraph 6 of the MB form is sufficiently clear - it should be treated as a reduction in cost basis (option (2)).

(P.S. technically, the closing costs are also part of the cost basis, but unnecessary for discussion purposes)

 

[mkatsy]

A reduction in cost basis doesn't mean you own less. I don't disagree with you there. You ownership stays the same. The reduction in cost basis means you bought that ownership interest for $161.10 per point (just like we think about it on this board) and not 183.10 per point which is what you paid up front, before the $3300 rebate.

The two possible arguments are (using 150 points as an example with member incentives):

(1) You paid $183.10 per point ($27,465) and got $3300 in "rental income" for the points they took. If you view it this way, the rental income would be a taxable event in 2023.

(2) You paid $161.10 per point ($27465 -$3300). There is no rental income. But you will pay a higher capital gain tax vs option (1) if you subsequently sell at some point in the future at a price of $190 per point, for example.

As mentioned in my prior post, you cannot double count the $3300 and say it's both rental income and a reduction in cost basis, because of double taxation issues.

To me, Paragraph 6 of the MB form is sufficiently clear - it should be treated as a reduction in cost basis (option (2)).

at the end of the day, it's going to come down to the 1099 ... we'll either get one, or we won't.