Capital Gains on DVC?

[tvwalsh]

I'm not selling now, but if I were, my average cost per point is only $56.00 per point. Assuming I sold points for $66.00 per point, would I need to report a capital gain on the $10 per share profit? I know you are not tax lawyers but...

 

[jel0511]

Yes you would. DVC is an asset and any gain/loss has to be reported for tax purposes. It is not an investment, so would be taxed at your regular tax bracket, not capital gains tax. It's considered sale of real estate.

 

[nuthut]

It could only happen with DVC. Most are worth about 10 cents on the dollar the day after closing.

 

[dcfromva]

tvwalsh,
I know you are just making a hypothetical case, but don't you get to deduct the expenses involved in selling the property in order to arrive at your basis (such as real estate commissions and the like) ?


-DC

 

[Richyams]

You may even be able to deduct dues...at least the part for improvement and mantainence.

If we ever had an assessment( I very seriously doubt this possibility), an assessment would be added to your cost basis.

 

[msdis]

We sold part of ours last year. Not at a gain but still had to go thru the whole process. Yes, you can deduct all the fees associated with the sale.

 

[SlyHubby]

Originally posted by Richyams
You may even be able to deduct dues...at least the part for improvement and mantainence.

based on my understanding of the tax issues and having owned investment/rental property in the past I do not think that is correct.

the real estate tax portion of the annual dues are tax deductible if you itemize. that is clearly broken out on your dues statement.

maintenance and improvement portion of dues is not deductible. if the property is solely for the purpose of investment/rental, then it is deductible. however, as real estate used for personal benefit, which clearly a timeshare that you use is, it is not deductible.

 

[Richyams]

Obviously not deductable from current earning, but improvements do add tou your cost bassis....so they are deductable.

I buy a house for 100, I improve it with a 10 widget, I sell it for 150, what is my cost basis? 100? 110?

Obviously its 110....now if I didn't sell it, would I have been able to deduct 10 from my personal income? Of course not.

Improvements DO add to the cost basis. Now timeshares are a little different, but not materially. An assessment for major appliances and an assessment for improvements are anologous to me putting in a pool and a paved driveway.....of course they raise my cost basis.

 

[SlyHubby]

Now timeshares are a little different, but not materially. An assessment for major appliances and an assessment for improvements are anologous to me putting in a pool and a paved driveway.....of course they raise my cost basis.

So, every year you go to the full-blown breakout of the annual dues, and keep a record of how much of it was attributable to improvements?

 

[Richyams]

No, because I don't expect to sell. That doesn't change the fact that capital improvements add to your cost basis lowering your capital gains tax.

 

[dcfromva]

Richyams,

I can't say that I am an expert in this subject, but I thought there was a difference in tax law treatment between capital improvements and replacing existing items for property that you use for your own benefit (as opposed to property that you use for rental which has depreciation issues).

This is how I understood it: If you add a garage onto your house where there was no garage before--you add that into your cost basis. If you replace your existing roof, you don't add that into your cost basis--unless you are replacing it in preparation for the sale of your house (within two years of the sale) .

(They keep changing the tax law all the time--so maybe this has changed?...)


-DC

 

[Richyams]

Yes, there are many factors and variables. All maintenence and replacement costs are only deductable against income from the property. Assessments for improvements, like a slide at OKW pool, would add to your cost basis.

I guess that there is not that much in the way of capital improvements in our dues....it would be any assessments for improvements that would add to your basis.

 

[SlyHubby]

exactly dcfromva, it is the difference between a "major" addition and maintenance/upkeep. from the dues perspective, maintenance/upkeep is the overwhelming majority of the non-real estate tax portion of the dues, other things that add to the basis, minimal.

it is one of those "consult your tax professional" if you're planning to do this.

 

[canda]

Capital Gains is not reported on the sale of your main home. So if you move to your dvc resort for 2 years you should be able to sell with no gains to report. Your main home would become your vaction home and then after you sell your main dvc home, you move back into your "vacation home."


disclaimer: this is a joke, and it is not funny because there is no humor whatsoever in our tax system

 

[AEN]

Be careful here. As an accountant, I am am seeing a lot of comments that are near accurate but not exact. My recommendation is talk to your advisor, because, a) you can have capital gains on real estate, b) if depreciated (which you probably did not) you could have recapture, c) gains on your primary residence is not eliminated but substantial limited....

Seek advice.

 

[DISNEY QUEEN CPA]

I agree with AEN. I am a Tax Accountant and I would strongly recommend talking to your tax advisor. Some of the comments are partially accurate and some are not. You need to take into consideration State as well as Federal Tax laws. Seek advise from the appropriate source. Your Tax Advisor.

 

[InstImpres]

TVWALSH -

Did you really want an answer to this or just to see how many of us you could make kick ourselves for not buying in the first time we looked at DVC?

, my average cost per point is only $56.00 per point. [/B]

Wish I could use the same number and had enjoyed all those extra trips

Sandy

 

[tvwalsh]

I do enjoy my $56 average cost for my 500 points. Even more, I have enjoyed these 11 years of ownership.

I sometimes do think about selling. Just think of what a great deal I would have had. I'm not sure people buying in now will be quite as fortunate.

 

[MikeBW]

Don't sell DVC until there is a flat tax!