Contracts drying up??

[Brian Noble]

sometimes sellers are simply lonely and love the attention of having something for sale

That's....reading a lot into the situation.

 

[kboo]

Trying.to.resist.going.to.website.

Meh, I caved, but also sent it to my husband bc I want him to think that it’s “his” idea.

You are doomed enablers....! A match made in heaven. GOOD LUCK.

I feel ya. But I did sign another after my long ordeal. Hoping it doesn't take nearly as long. (still don't have those points yet)

So .... our first contacts were resale and they went smoothly. One passed ROFR in 9 days (then 30 days in estoppel); another was in ROFR for 20+ days (it felt like, probably was only 2 weeks) then estoppel took like 10. We bought 3 resale contracts and then we bought Riviera pre-sale while on a vacation at DIsney. It was pretty crazy: Signed contracts, paid, points in account in like a day. Booked a Riviera stay from our bed at VGF a few days after we did the "tour". Sadly, that instant gratification is worth something too. (Maybe this goes in resale price v direct thread). For us, it was worth it to get 11 mo at an EP/HS resort, full unrestricted points, and instant gratification, for about $20pp more.

HOWEVER: I am looking at that site and I blame you all. (VGC? AUL? RIV resale?

 

[VGCgroupie]

Yup, https://dvcrequest.com/

There’s more tax implications if you rent your points independently and then use them for travel. So it’s certainly beneficial for this instance financially to use a broker, even if David’s rates seem a bit behind the curve.

www.dvcrentalstore.com also offers them, but last I checked just DCL. Paul mentioned on the podcast that Royal was coming. David’s offers swaps for DCL, Celebrity, Royal and NCL, so a lot more choice there.

I don’t own points to rent, but all my contracts were super loaded and my travel schedule was also spoken for this year.

Awesome thanks!

 

[VGCgroupie]

You are doomed enablers....! A match made in heaven. GOOD LUCK.

So .... our first contacts were resale and they went smoothly. One passed ROFR in 9 days (then 30 days in estoppel); another was in ROFR for 20+ days (it felt like, probably was only 2 weeks) then estoppel took like 10. We bought 3 resale contracts and then we bought Riviera pre-sale while on a vacation at DIsney. It was pretty crazy: Signed contracts, paid, points in account in like a day. Booked a Riviera stay from our bed at VGF a few days after we did the "tour". Sadly, that instant gratification is worth something too. (Maybe this goes in resale price v direct thread). For us, it was worth it to get 11 mo at an EP/HS resort, full unrestricted points, and instant gratification, for about $20pp more.

HOWEVER: I am looking at that site and I blame you all. (VGC? AUL? RIV resale?

That direct purchase hit’s different than resale. Signed contract and had a room booked within an hour and a half.

 

[ocdb8r1]

There’s more tax implications if you rent your points independently and then use them for travel. So it’s certainly beneficial for this instance financially to use a broker, even if David’s rates seem a bit behind the curve.

This is simply not the case. The tax implications are the same. David's simply rents your points for you and uses the proceeds to book you a cruise. From a US tax perspective, you are under the same obligation to claim that rental income. David's does not report any rental income as they are based in Canada (and thus don't need to comply with the US 1099 rules) but it doesn't change a US taxpayer's obligation.

Also, you are effectively paying David's a commission twice, as they mark up your points by $5/each when they sell them and they gain a commission on the cruise reservation.

From a purely financial perspective, you are much better off renting on your own (for which you can easily get a minimum $18/point - $2 more per point than David's offers...and even more than some other brokers offer). Then use the proceeds to purchase a cruise with an agent that offers a rebate in the form of on board credit. If you're not renting often, the tax implications are little more than paperwork as you can likely deduct all costs associated with renting the points (annual dues, time, advertisement costs...etc) from the profit and can depreciate your original DVC purchase price as well to fully cover any net income.

Now, all that said, it's likely easier to just turn the whole process over to David's and wash your hands of it, but you're paying a price for that.

 

[VGCgroupie]

This is simply not the case. The tax implications are the same. David's simply rents your points for you and uses the proceeds to book you a cruise. From a US tax perspective, you are under the same obligation to claim that rental income. David's does not report any rental income as they are based in Canada (and thus don't need to comply with the US 1099 rules) but it doesn't change a US taxpayer's obligation.

Also, you are effectively paying David's a commission twice, as they mark up your points by $5/each when they sell them and they gain a commission on the cruise reservation.

From a purely financial perspective, you are much better off renting on your own (for which you can easily get a minimum $18/point - $2 more per point than David's offers...and even more than some other brokers offer). Then use the proceeds to purchase a cruise with an agent that offers a rebate in the form of on board credit. If you're not renting often, the tax implications are little more than paperwork as you can likely deduct all costs associated with renting the points (annual dues, time, advertisement costs...etc) from the profit and can depreciate your original DVC purchase price as well to fully cover any net income.

Now, all that said, it's likely easier to just turn the whole process over to David's and wash your hands of it, but you're paying a price for that.

The other broker mentioned is US based also does not provide a 1099 because you are essentially trading points in Dollar for dollar so no profit is being made.

 

[VGCgroupie]

The other broker mentioned is US based also does not provide a 1099 because you are essentially trading points in Dollar for dollar so no profit is being made.

Adding no profit being made by the DVC owner trading points not the broker, yes they profit.

 

[Tatebeck]

If you use a vacation swap option the government sees it as you using your points for a vacation, the same as if you swapped them into interval international etc. No money ever came back to your account and so there is nothing to tax you on. I plan to use one in the future for non Disney trips if I have points to spare

 

[juliebee]

My goal with 1 contract is to rent to swap for cruising.

I would love to learn more about that as we love to cruise too. If you are using the swap program through DVC Rental Store, has it been worth it? I would want to have enough points to cruise once a year for 5-7 nights, but maybe it's not a great use of points? I'd love more info. Maybe this isn't the right thread for this, so let me know if there is a good thread on it

 

[Sandisw]

I would love to learn more about that as we love to cruise too. If you are using the swap program through DVC Rental Store, has it been worth it? I would want to have enough points to cruise once a year for 5-7 nights, but maybe it's not a great use of points? I'd love more info. Maybe this isn't the right thread for this, so let me know if there is a good thread on it

I have not done it but from what I have learned is that you offer you points for rent and in exchange they become your travel agent for the cruise booking. How many points needed to rent is based on what cruise you are looking into booking.

 

[VGCgroupie]

I would love to learn more about that as we love to cruise too. If you are using the swap program through DVC Rental Store, has it been worth it? I would want to have enough points to cruise once a year for 5-7 nights, but maybe it's not a great use of points? I'd love more info. Maybe this isn't the right thread for this, so let me know if there is a good thread on it

I haven't done it yet since only 1 of my 3 resales has actually closed. I started a thread here a couple weeks back. https://www.disboards.com/threads/cruise-swap-via-3rd-party-brokers.3947775/

 

[ocdb8r1]

The other broker mentioned is US based also does not provide a 1099 because you are essentially trading points in Dollar for dollar so no profit is being made.

If you use a vacation swap option the government sees it as you using your points for a vacation, the same as if you swapped them into interval international etc. No money ever came back to your account and so there is nothing to tax you on. I plan to use one in the future for non Disney trips if I have points to spare

This is not how the IRS sees it and there is explicit guidance on barters and trades, with examples that specifically talk about rent and use of real property and reporting obligations. Money came back to someone acting as your agent/broker, which they then used to purchase another product/service. This may absolve the broker from 1099 reporting rules, but that doesn't mean it relives the owner of IRS reporting obligations.

As I said above, it is likely moot for anyone not renting (or using this cruise exchange) often as there are plenty of legal ways to reduce any income tax obligation....but there's nothing "magical" about what the brokers are doing and you're paying them hefty fees to do it.

 

[Tatebeck]

This is not how the IRS sees it and there is explicit guidance on barters and trades, with examples that specifically talk about rent and use of real property and reporting obligations. Money came back to someone acting as your agent/broker, which they then used to purchase another product/service. This may absolve the broker from 1099 reporting rules, but that doesn't mean it relives the owner of IRS reporting obligations.

As I said above, it is likely moot for anyone not renting (or using this cruise exchange) often as there are plenty of legal ways to reduce any income tax obligation....but there's nothing "magical" about what the brokers are doing and you're paying them hefty fees to do it.

I understand the IRS is trying to crack down on trades, but I don't think it applies here, and even if it did, they would have to go after Disney, Interval International, and the rental swapping companies as well. I'm not sure if they are using some strange type of 1031 exchange rule or what, but it has to be something.

Let me ask you, do have to pay taxes when trading in DVC points to Interval International to do a timeshare swap? How much?
Do you have to pay income tax when trading in DVC points directly to Disney for a cruise or for reservation points? Technically since they have to be converted this is also a swap, but no one has ever paid income taxes on these that I am aware of.

If they aren't coming after Disney, Interval International, or the large point rental companies, which would be easy money if you are correct, then they aren't coming after us lol. And figuring out how to even tax them would be a nightmare. I'll just do what the rental companies or Disney, the developer of the timeshare, say to in the meantime.

https://dvcrentalstore.com/blog/tips-for-renting-out-dvc-points/
"If you are using your rental income for a cruise, a trip to Universal Studios, or beach vacation, consider taking advantage of the DVC Rental Store’s Point Swap Program. Not only will you get a great value for your points and a seamless experience with the help of your Swap Specialist, but there is a tax benefit. While income from a standalone rental is taxable, income from a swap goes right to your vacation. It is considered an even trade, and no 1099 is issued."

 

[VGCgroupie]

This is not how the IRS sees it and there is explicit guidance on barters and trades, with examples that specifically talk about rent and use of real property and reporting obligations. Money came back to someone acting as your agent/broker, which they then used to purchase another product/service. This may absolve the broker from 1099 reporting rules, but that doesn't mean it relives the owner of IRS reporting obligations.

As I said above, it is likely moot for anyone not renting (or using this cruise exchange) often as there are plenty of legal ways to reduce any income tax obligation....but there's nothing "magical" about what the brokers are doing and you're paying them hefty fees to do it.

How does this not effect Disneys

I understand the IRS is trying to crack down on trades, but I don't think it applies here, and even if it did, they would have to go after Disney, Interval International, and the rental swapping companies as well. I'm not sure if they are using some strange type of 1031 exchange rule or what, but it has to be something.

Let me ask you, do have to pay taxes when trading in DVC points to Interval International to do a timeshare swap? How much?
Do you have to pay income tax when trading in DVC points directly to Disney for a cruise or for reservation points? Technically since they have to be converted this is also a swap, but no one has ever paid income taxes on these that I am aware of.

If they aren't coming after Disney, Interval International, or the large point rental companies, which would be easy money if you are correct, then they aren't coming after us lol. And figuring out how to even tax them would be a nightmare. I'll just do what the rental companies or Disney, the developer of the timeshare say to in the meantime.

https://dvcrentalstore.com/blog/tips-for-renting-out-dvc-points/
"If you are using your rental income for a cruise, a trip to Universal Studios, or beach vacation, consider taking advantage of the DVC Rental Store’s Point Swap Program. Not only will you get a great value for your points and a seamless experience with the help of your Swap Specialist, but there is a tax benefit. While income from a standalone rental is taxable, income from a swap goes right to your vacation. It is considered an even trade, and no 1099 is issued."

^^ yep

 

[ocdb8r1]

I understand the IRS is trying to crack down on trades, but I don't think it applies here, and even if it did, they would have to go after Disney, Interval International, and the rental swapping companies as well. I'm not sure if they are using some strange type of 1031 exchange rule or what, but it has to be something.

Let me ask you, do have to pay taxes when trading in DVC points to Interval International to do a timeshare swap? How much?
Do you have to pay income tax when trading in DVC points directly to Disney for a cruise or for reservation points? Technically since they have to be converted this is also a swap, but no one has ever paid income taxes on these that I am aware of.

If they aren't coming after Disney, Interval International, or the large point rental companies, which would be easy money if you are correct, then they aren't coming after us lol. And figuring out how to even tax them would be a nightmare. I'll just do what the rental companies or Disney, the developer of the timeshare, say to in the meantime.

https://dvcrentalstore.com/blog/tips-for-renting-out-dvc-points/
"If you are using your rental income for a cruise, a trip to Universal Studios, or beach vacation, consider taking advantage of the DVC Rental Store’s Point Swap Program. Not only will you get a great value for your points and a seamless experience with the help of your Swap Specialist, but there is a tax benefit. While income from a standalone rental is taxable, income from a swap goes right to your vacation. It is considered an even trade, and no 1099 is issued."

How does this not effect Disneys

^^ yep

First, the purpose of the post wasn't to indicate anyone would have any actual tax liability...as I mentioned multiple times, it's likely you could completely offset any net income. The purpose was to illustrate that these programs are not some financially beneficial windfall for owners. Yes, they may make your life easier, but you're paying a large fee for that convenience.

Second, pure exchange programs are in no way the same as using a broker who structures the program such that they explicitly rent your points for a fixed fee to explicitly cover the cash cost of the alternative vacation you are seeking to take; nor are they "like for like" when you exchange pure accommodation for "room, board and transportation". Those exchange programs may take the position that they are "the same", but they are not the ones with a potential tax liability if the IRS comes knocking; they don't have a responsibility to report beyond their own income (and while they have currently taken the position they also don't need to issue a 1099, the new 1099 rules haven't even been enforced for a full year to know whether their interpretation is right or not). Traditional exchange programs are not based on any guarantee they can otherwise use the week/points you are trading in, a fixed monetary value for that week or points, nor a fixed value of whatever you receive in exchange....that makes it much more difficult for the IRS or any other agency to demonstrate you received value above your actual costs. Not so in the case of these brokers which specifically outline that they are renting your points for a fixed value and then using the proceeds to pay for a set value alternative. What magic is a broker adding to this equation? Are you telling me you'd be comfortable doing this on your own, and sitting in front of the IRS to explain why the money you received from renting the points shouldn't be counted as income because you used that money for another vacation?

Regardless, as I said in every post, I think it unlikely anyone not taking advantage of these programs repeatedly would end up with any tax liability. I just don't agree that using one of these brokers provides some tax benefit that makes them financially beneficial over doing it yourself.

 

[Sandisw]

First, the purpose of the post wasn't to indicate anyone would have any actual tax liability...as I mentioned multiple times, it's likely you could completely offset any net income. The purpose was to illustrate that these programs are not some financially beneficial windfall for owners. Yes, they may make your life easier, but you're paying a large fee for that convenience.

Second, pure exchange programs are in no way the same as using a broker who structures the program such that they explicitly rent your points for a fixed fee to explicitly cover the cash cost of the alternative vacation you are seeking to take; nor are they "like for like" when you exchange pure accommodation for "room, board and transportation". Those exchange programs may take the position that they are "the same", but they are not the ones with a potential tax liability if the IRS comes knocking; they don't have a responsibility to report beyond their own income (and while they have currently taken the position they also don't need to issue a 1099, the new 1099 rules haven't even been enforced for a full year to know whether their interpretation is right or not). Traditional exchange programs are not based on any guarantee they can otherwise use the week/points you are trading in, a fixed monetary value for that week or points, nor a fixed value of whatever you receive in exchange....that makes it much more difficult for the IRS or any other agency to demonstrate you received value above your actual costs. Not so in the case of these brokers which specifically outline that they are renting your points for a fixed value and then using the proceeds to pay for a set value alternative. What magic is a broker adding to this equation? Are you telling me you'd be comfortable doing this on your own, and sitting in front of the IRS to explain why the money you received from renting the points shouldn't be counted as income because you used that money for another vacation?

Regardless, as I said in every post, I think it unlikely anyone not taking advantage of these programs repeatedly would end up with any tax liability. I just don't agree that using one of these brokers provides some tax benefit that makes them financially beneficial over doing it yourself.

But if you use your points for the Disney collection, Disney does in fact rent your room to cash guests and use the proceeds to pay for your cruise.

So, isn’t that the same situation? Or different because it’s a function of the program?

 

[Tatebeck]

First, the purpose of the post wasn't to indicate anyone would have any actual tax liability...as I mentioned multiple times, it's likely you could completely offset any net income. The purpose was to illustrate that these programs are not some financially beneficial windfall for owners. Yes, they may make your life easier, but you're paying a large fee for that convenience.

Second, pure exchange programs are in no way the same as using a broker who structures the program such that they explicitly rent your points for a fixed fee to explicitly cover the cash cost of the alternative vacation you are seeking to take; nor are they "like for like" when you exchange pure accommodation for "room, board and transportation". Those exchange programs may take the position that they are "the same", but they are not the ones with a potential tax liability if the IRS comes knocking; they don't have a responsibility to report beyond their own income (and while they have currently taken the position they also don't need to issue a 1099, the new 1099 rules haven't even been enforced for a full year to know whether their interpretation is right or not). Traditional exchange programs are not based on any guarantee they can otherwise use the week/points you are trading in, a fixed monetary value for that week or points, nor a fixed value of whatever you receive in exchange....that makes it much more difficult for the IRS or any other agency to demonstrate you received value above your actual costs. Not so in the case of these brokers which specifically outline that they are renting your points for a fixed value and then using the proceeds to pay for a set value alternative. What magic is a broker adding to this equation? Are you telling me you'd be comfortable doing this on your own, and sitting in front of the IRS to explain why the money you received from renting the points shouldn't be counted as income because you used that money for another vacation?

Regardless, as I said in every post, I think it unlikely anyone not taking advantage of these programs repeatedly would end up with any tax liability. I just don't agree that using one of these brokers provides some tax benefit that makes them financially beneficial over doing it yourself.

First, you mentioned earlier renting them yourself for $18 per point. Some of the these DVC rental swaps can get $18 or even $20 per point as well. How is that paying a "large fee" for that convenience, if you can get the same dollar amount from them, and if (like Disney or the rental swap companies assume) there is no income to tax to report from it?

Second, the IRS would actually see them the exact same if they truly want the barter/swap reported. Disney rents their points just like the swap companies do. The IRS site says that both sides of the barter should report the full value. Disney or the rental swap company would report the value of the points that you gave them and they rented. You would report the value of the cruise/other trip that you received. The only difference between them is that Disney already had the cruise, and the rental swap company bought it just before trading it to you. The IRS makes no differentiation between things you already had ready to sell/trade vs things you just purchased to sell/trade. Just because they just purchased the cruise and then immediately swapped it doesn't mean it's not a swap. (The only things that could change for a barter is whether the things you swapped was long term vs short term gain or what your cost basis is if it was an inherited good). At the end of the day if you traded points to either Disney or a point swap company in exchange for the EXACT SAME CRUISE, then the IRS would see it as the same swap regardless of who it was through. What magic do you think Disney is doing that theirs is exempt from the swap rules, but no one else's is? And yes, Disney and those companies would be on the hook for their half of the tax liability if the "IRS came knocking" because again, they say that both sides are supposed to report a barter as the full value of what they received.

It could be because they consider it a like kind swap, it could be something in the timeshare law, it could be because of something in the "for personal use only" terms of DVC, it could be something else entirely. I'm not sure what exactly Disney, Interval International, or the rental stores are going by that they do not have to report it as a barter, but it has to be something.

And in response to another argument above, in some cases DVC points CAN/COULD be normally used for food (AKV Club level) and transportation (when the Magical Express was running, free transportation to the parks and Disney springs, etc.) as well, so just because a cruise includes food and most DVC rooms do not does not completely change the nature of it. Or are you now going to argue that because DVC's AKV club level suites include food that even when booking them normally you now have to claim that to the IRS as well? lol

And yes, if the IRS asked I would point them to the Disney exchanges, etc and how it is the same "barter" for a different trip and no tax has ever been collected for it. If they want money that badly they can go after them as they originated the swap rules. It would be ridiculous to think that if you trade your points in for some trips at some companies then its not a barter but if you trade them in for other trips (or even the same trips!) from a different company then it is a reportable "barter." If NONE of the companies taking DVC points in trade for alternate trips are reporting them to the IRS then there must be something that they are aware of that makes these trades exempt

 

[ocdb8r1]

But if you use your points for the Disney collection, Disney does in fact rent your room to cash guests and use the proceeds to pay for your cruise.

So, isn’t that the same situation? Or different because it’s a function of the program?

Disney doesn't guarantee that they will get a specific $$$ amount for the points and doesn't even guarantee they will "rent" the points. The don't make a specific correlation in any amount they receive with the vacation you get in exchange. It's very well possible in any given year DVC accepts more points than they can "rent" and some are not rented at all, some are pumped back into the DVC system to provide inventory, some are rented below the value of whatever alternative vacation an owner took. Of course, I am sure on balance DVC makes out quite well (which is another point, if they rent the points for vastly more than the value of the alternative vacation, they aren't giving you anything in return. At the end of the day, the system is so opaque, it would be hard for the IRS to discern the "net" received by an owner for such a transaction.

Not so in the case of external brokers who structure the transaction as clearly renting points for XX and using the proceeds to pay YY.

First, you mentioned earlier renting them yourself for $18 per point. Some of the these DVC rental swaps can get $18 or even $20 per point as well. How is that paying a "large fee" for that convenience, if you can get the same dollar amount from them, and if (like Disney or the rental swap companies assume) there is no income to tax to report from it?

For nearly any example you can come up with you should be able to easily get $2-3 more per point than the brokers are offering. They are paying $18-20 only on points in incredibly high demand and never if those points are used in the 7-month window. Not to mention, none of these brokers is offering any of the same incentives the tradition cruise agents offer on the cruise in the way of on board credits or other benefits. Yet another good example of why this is nothing like the DVC or other exchange companies; all the "swap" agreements brokers have contain explicit provisions about the value they are offering per point, depending on the resort and when they secure a reservation for a renter. With DVC (as mentioned above), DVC is taking on the risk of what value it can obtain from whatever points you give up.

Second, the IRS would actually see them the exact same if they truly want the barter/swap reported. Disney rents their points just like the swap companies do. The IRS site says that both sides of the barter should report the full value. Disney or the rental swap company would report the value of the points that you gave them and they rented. You would report the value of the cruise/other trip that you received. The only difference between them is that Disney already had the cruise, and the rental swap company bought it just before trading it to you. The IRS makes no differentiation between things you already had ready to sell/trade vs things you just purchased to sell/trade. Just because they just purchased the cruise and then immediately swapped it doesn't mean it's not a swap. (The only things that could change for a barter is whether the things you swapped was long term vs short term gain or what your cost basis is if it was an inherited good). At the end of the day if you traded points to either Disney or a point swap company in exchange for the EXACT SAME CRUISE, then the IRS would see it as the same swap regardless of who it was through. What magic do you think Disney is doing that theirs is exempt from the swap rules, but no one else's is?

And yes, Disney and those companies would be on the hook for their half of the tax liability if the "IRS came knocking" because again, they say that both sides are supposed to report a barter as the full value of what they received. And yes, if the IRS asked I would point them to the Disney exchanges, etc and how it is the same "barter" for a different trip and no tax has ever been collected for it. If they want money that badly they can go after them as they originated the swap rules. It would be ridiculous to think that if you trade your points in for some trips at some companies then its not a barter but if you trade them in for other trips (or even the same trips!) from a different company then it is a reportable "barter." If NONE of the companies taking DVC points in trade for alternate trips are reporting them to the IRS then there must be something that they are aware of that makes these trades exempt

First - as above, I see lots of differences between the two types of programs. Second, and most important, DVC and these other exchange programs do report their income from these exchanges to the IRS. I guarantee you that in the aggregate DVC reports the net income from any points it rents....and I guarantee you in calculating that "net" income, it counts the retail cost of the cruise (for the example you've given). They are clearly covering their reporting obligations. Third, I'm not sure what guidance you're reading that the IRS is ok with a "swap" or "barter" and doesn't expect it to be reported. As I mentioned before, there is explicit income guidance from the IRS on swapping/bartering/trading goods or services and it's an area of increase scrutiny. As above, for most of these trading programs it's likely this is not an area easy for the IRS to pursue, nor one where even if they did they may realize much net tax. The point is that using a broker doesn't guarantee an elimination of potential tax liability, nor is it some immense financial benefit (which has and continues to be the whole purpose of my posts, given the initial assertion was that there was a financial benefit to using a broker). And guess what, it's fine if you don't agree with me. I have conceded using a broker may have other advantages and for some may be the easiest way to go.

And in response to another argument above, in some cases DVC points CAN/COULD be normally used for food (AKV Club level) and transportation (when the Magical Express was running, free transportation to the parks and Disney springs, etc.) as well, so just because a cruise includes food and most DVC rooms do not does not completely change the nature of it. Or are you now going to argue that because DVC's AKV club level suites include food that even when booking them normally you now have to claim that to the IRS as well? lol

Again, not even closely the same. lol. Disney transportation isn't moving you through international waters to other countries nor is a lounge for a club level suite even close to what a cruise offers. I've said my piece on this. It's not a matter of a "right" or "wrong" answer, it's a matter of risk tolerance. If you see there being no increased risk in using a broker that explicitly indicates it's going to rent your points and use the proceeds to purchase you an alternative vacation, it's your prerogative. No one is under any obligation to try to achieve the most they can for their points in any given year they can't use them...some let them go to waste completely. I apologize to anyone I've offended for suggesting that there are multiple alternative reasons why using a broker isn't necessarily the best financial move given the alternatives.

 

[Tatebeck]

First - as above, I see lots of differences between the two types of programs. Second, and most important, DVC and these other exchange programs do report their income from these exchanges to the IRS. I guarantee you that in the aggregate DVC reports the net income from any points it rents....and I guarantee you in calculating that "net" income, it counts the retail cost of the cruise (for the example you've given). They are clearly covering their reporting obligations. Third, I'm not sure what guidance you're reading that the IRS is ok with a "swap" or "barter" and doesn't expect it to be reported. As I mentioned before, there is explicit income guidance from the IRS on swapping/bartering/trading goods or services and it's an area of increase scrutiny. As above, for most of these trading programs it's likely this is not an area easy for the IRS to pursue, nor one where even if they did they may realize much net tax. The point is that using a broker doesn't guarantee an elimination of potential tax liability, nor is it some immense financial benefit (which has and continues to be the whole purpose of my posts, given the initial assertion was that there was a financial benefit to using a broker). And guess what, it's fine if you don't agree with me. I have conceded using a broker may have other advantages and for some may be the easiest way to go.



Again, not even closely the same. lol. Disney transportation isn't moving you through international waters to other countries nor is a lounge for a club level suite even close to what a cruise offers. I've said my piece on this. It's not a matter of a "right" or "wrong" answer, it's a matter of risk tolerance. If you see there being no increased risk in using a broker that explicitly indicates it's going to rent your points and use the proceeds to purchase you an alternative vacation, it's your prerogative. No one is under any obligation to try to achieve the most they can for their points in any given year they can't use them...some let them go to waste completely. I apologize to anyone I've offended for suggesting that there are multiple alternative reasons why using a broker isn't necessarily the best financial move given the alternatives.

You can get a lot more renting yourself of course, but that usually involves scummy things like specifically reserving hard to book rooms like value rooms, tower rooms, BWV standard studios, etc and jacking up the price on them. You had just mentioned $18 per point specifically and that is definitely achievable from the swap brokers (unless you only have the lowest value point locations). That is why I mentioned that. Its just ease of renting vs squeezing out all that you can when renting.

I am sure that Disney does report their income to the IRS when they rent out our converted points, but according to the swap/barter guidance you are referencing they would have to report it as income twice (once when the receive the points from you in the swap and a second time when they rent them out for money to someone else) Do you have any proof that they do report the points they receive from members using DVC points for cruises and other non DVC bookings directly as income (before renting them out) then again income again once they rent them out? I have never seen any information that Disney or Interval International or any other rental companies do when using it as a swap. The only confirmation or denial of this is from some of the rental companies like I posted that says that they/we don't have to.

Everything from the IRS I can find is very unclear. I can find either references using 2 businesses as examples or says that you "may" have to file certain forms or that it is taxable UNLESS there is an exception. And every example they give is bartering 2 very different things, and usually between businesses. Accounting services for house painting, rent from a landlord for artwork, etc. I specifically said I don't know what exception or rule they are using to avoid this. But if I had to guess it's probably a like exchange. Their examples are vastly different than say using 100 DVC points to vacation at location A vs using 100 DVC points in a swap to vacation at location B. Heck even booking at a different location at 7 months is a type of swap due to the resort agreements. Your contract only guarantees use at your home resort after all. Should DVC members and Disney be reporting these as income. According to you they would be. Just because it's hard to value something doesn't exempt them. Artwork itself is specifically is hard to value, but they use it in one of their examples.

In my mind the swap/barter guidance is clearly being used to prevent people/businesses from being able to use goods and services to swap as payment back and forth to lower their taxable income and receive different goods and services. Like an artist paying for everything by swapping their artwork vs selling their artwork and then paying in dollars. In this example the artist is doing this to avoid taxes. This is very different than something like trading in your car that is worth $25,000 straight up for a truck that is worth $25,000. The truck can definitely do more but it would likely be considered a like exchange and will not require you to pay tax on the truck as if you received a $25,000 payment. In this example you WOULDN'T be doing this to avoid taxes and it would be ridiculous if you had to.

 

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First, I would use a broker not just for the tax reasonings but because I generally don't like people and dealing with them. So, paying more to not deal with them is 100% worth it, not to mention the bajillion scam artists out there these days.

Next, these are reputable brokers, I cannot imagine they would be committing tax fraud over point swaps, especially when point swaps aren't where they get most of their business from. Originally it was said Davids didn't report just because they are in Canada, now it's all point swap brokers are evading taxes and advising their clients to as well.