claiming taxes on rental income?

[eileenkeeney]

ok,
So I am claiming the income I got from renting my DVC points (this is the first time I have done this).

I need to know what costs to claim.

Annual Dues for sure.
Does anyone know exactly what the dues were, per point, for OKW for 2008?

Next, should I just take the total number of points for the life of the membership divided by the amount I paid for the membership, to determine the cost I paid per point?
If only I could remember how much I paid

Or do people tend to just use some per-point value?

I would rather pay a little extra tax, then get challenged by the IRS.

 

[CaptHomer]

You are an honest person!

Part of the annual dues is property tax. Make sure you don't claim the cost of that if you also claim it as an itemized deduction.

Basically, don't claim it as an itemized deduction, claim it as a cost of the rental property so you can offset the income this will lower your AGI.

 

[eileenkeeney]

I would rather pay the gov a few hundred dollars then feel guilty.

I have never claimed the property tax portion of my dues, as a deduction, in the past. Maybe I should be doing this (except the years I rent the points out, and claim all of the dues as a cost.)

Anyway, I found the information I need.
Went from the gov owing me $18, to my owing them a few hundred.

I am still curious how others do this.

 

[jerseygal]

This wouldn't come into play until you sell the DVC interest.Another words, any "gain" would be calculated as the selling price less you "basis"..
Your "basis" is the amount you paid, closing costs you incurred to buy, plus any selling commissions you might have to pay on the sale..

As far as reporting the income, technically, you report on Schedule E, rental income..

You would include the amount you received on the rental as income...I would deduct the property tax portion which is included in the annual dues...

Good Luck!

 

[RobDoc]

Did you also pay and report the occupancy and sales tax due from the rental to the county and state of FL? You can also deduct those expenses on your Federal report.

 

[YourEveryDayAdam]

You could also probably deduct the cost of the points themselves in this manner:

(price paid per point) / (# of years in the contract) * (number of points used for reservation)

As an example, if I were to rent out all 160 of my 225 BLT points one year. I paid $112 per point.

$112 / 52 years in the contract = $2.15385 * 160 points for the reservation = $344.62

This would be in addition to your annual dues.

I would recommend consulting a tax professional to be certain what you can include as expenses.

 

[YourEveryDayAdam]

Forgot to say that you may also be able to deduct the interest from financing as an expense, if you financed your DVC purchase and are not deducting the interest from your taxes already.

In the example I did above, I could deduct the portion of interest that was paid on the points used for rental. I used about 63% of my points to make the reservation, so I could probably deduct 63% of the interest I paid this year. If I paid $500 this year in interest on my loans, I could potentially deduct $315 in interest.

Also, if you received payment via PayPal, then be sure to deduct the transaction fees PayPal may have charged. PayPal charges 3% + $0.30. So, if I charged $11 per point for 160 points, that's $1,760 and PayPal's fee would be $53.10

Total Deduction: $587.20 in Annual Dues (160 x $3.67), $344.62 for the cost of buying the points for that year, $315 in interest, and $53.10 in PayPal fees: $1,299.92

 

[Dean]

You could also probably deduct the cost of the points themselves in this manner:

(price paid per point) / (# of years in the contract) * (number of points used for reservation)

As an example, if I were to rent out all 160 of my 225 BLT points one year. I paid $112 per point.

$112 / 52 years in the contract = $2.15385 * 160 points for the reservation = $344.62

This would be in addition to your annual dues.

I would recommend consulting a tax professional to be certain what you can include as expenses.

You'd have to depreciate the interest rather than simply claiming a pro rated principle cost deduction. Then if you sold, you'd have to adjust it again since you'd have depreciated a portion of what you sold. I worry about principle costs or depreciation unless you plan on renting the same points most years. You can also deduct the cost of phone calls, listing fees, paypal fees, any mailing fees if applicable, any escrow costs if you use such a service.

 

[jerseygal]

Interest on a timeshare can be deducted in the following manner:

You can deduct the entire amount paid in a given year on Schedule A as mortgage interest if you itemize.

If you prepare Schedule E, Rental Income, I would deduct a percent of the annual interest as follows: If you rented 100 points out of 200 points, you would deduct 50% of the annual timeshare interest on Schedule E...The other remaining 50% interest would be deducted on Schedule A as mortgage interest...................................

Happy April 15th!!!!!!!!!!!!

 

[Dean]

Interest on a timeshare can be deducted in the following manner:

You can deduct the entire amount paid in a given year on Schedule A as mortgage interest if you itemize.

If you prepare Schedule E, Rental Income, I would deduct a percent of the annual interest as follows: If you rented 100 points out of 200 points, you would deduct 50% of the annual timeshare interest on Schedule E...The other remaining 50% interest would be deducted on Schedule A as mortgage interest...................................

Happy April 15th!!!!!!!!!!!!

wouldn't the first option require this be your "second home" and not deducting other interest? Wouldn't it also require that that home (DVC) be used to secure the debt. So if you had a second home or condo somewhere else, you would not be able to deduct the interest at all. Also, doesn't the loan have to be written as a mortgage and not just a loan? Are DVC's loans written that way? My understanding is that special assessments would not be deductible in any way. In some cases you might not have to report the income under the vacation home rules. My reading in that case suggests you'd for this to play you probably have to be renting your home resort for less than 15 days a year and use your home resort for more than 15 days that same year, presumably all on your points.