Cruise Swap via 3rd party brokers

[Tatebeck]

When you use SSR points at VGF you are simply redeeming your points with the larger DVC program and has fixed redemption costs. You are not selling your points to DVC who then gives you are room as payment.

Meanwhile saying "I would like a cruise" (making a purchase) and saying "here is your payment" (DVC Points) is different.

One of these actions happen within the deeded real estate interest rules. The other is a stand alone transaction.

Individuals wanting to report everything correctly should talk to an expert and outline the process correctly. Those who want to ignore this can do as they wish.

I will agree that 7 month exchanges would definitely be tougher to consider a taxable swap. But not because of what is in the DVC contracts. It would be because of how the points act/function in that case.

In fact in a way, what is in a contract really has no sway on the IRS and what is taxable or not. Writing "this is not taxable" in a contract before you sign it does not change anything with how the IRS will treat that transaction. You can't just "contract" your way out of taxes unless the tax laws and IRS allow you to. And performing the same transaction with and then without that contract attempting this would then still result in the same taxable situation either way, depending if the IRS actually thinks it was taxable or not.

The reason 7 month home resort swaps would definitely be different is because the points aren't necessarily "sold" to anyone. When you use your points at another resort, it really just opens up availability at your home resort for others. If you use 100 points at 7 months at a different resort, 100 "points" worth of nights open up for the year for someone else to use. And if another member uses them then you truly did swap points in a way without any money ever changing hands. It could still be considered a barter to the IRS, but is fundamentally different than a transaction in which actual money is exchanged. With that being said, if nobody takes that opening you created then Disney does get to sell/rent the points/nights as they see fit. Which then would indeed be very similar to the third party swaps.

And now that brings us to the first party swaps. When you swap for a cruise, ABD, etc you are giving Disney those points, which they do then sell/rent out for real money, just like what is done with the third party swaps.

Like I said before. unless there is a tax code saying that the first party is exempt but that the third party is not, then they are essentially identical transactions in the IRS's eyes, regardless of what is/isn't in the DVC contract. In both cases you gave up points to someone who instead of money gave you a different stay/vacation and then in turn rented out those points they received for very real $. If you wouldn't mention your first party swap on your taxes, it does not appear you would have to for a third party swap either.

Unless you are saying that we all should report first party swaps as barter transactions on our taxes? Which would a stronger argument based on the wording of the IRS codes that I have seen, but then would be very strange based on how the swaps seem to work historically and how Disney and the third parties do it according to their policies.

 

[sethschroeder]

And now that brings us to the first party swaps. When you swap for a cruise, ABD, etc you are giving Disney those points, which they do then sell/rent out for real money, just like what is done with the third party swaps.

If someone said you had to pay tax on that I likely wouldn't give it a second thought.

I could see more of an argument for first party swaps not being impacted although I would never do the swap so never have given it a thought.