DVC Rental-David's-DVC Rental Pros

[GoingSince1990]

You depreciate your DVC on your taxes as an active or mixed use rental? TurboTax or through a CPA?

My approach is spelled out in this thread:
https://www.disboards.com/threads/filling-out-a-1040-schedule-e-for-rental-income.3874675/
I use a CPA for my taxes but would use the same approach if doing my taxes myself. As I mention in the thread, the fact that DVC is guaranteed to be worth zero on a fixed date in the future means that it is undeniably a depreciating asset. In many years of using this approach neither my accountant nor the IRS has ever complained.

 

[DonMacGregor]

My approach is spelled out in this thread:
https://www.disboards.com/threads/filling-out-a-1040-schedule-e-for-rental-income.3874675/
I use a CPA for my taxes but would use the same approach if doing my taxes myself. As I mention in the thread, the fact that DVC is guaranteed to be worth zero on a fixed date in the future means that it is undeniably a depreciating asset. In many years of using this approach neither my accountant nor the IRS has ever complained.

Honest question: I fully understand reporting point rental income, but when it comes to other tax aspects, how much does it really move the needle? I mean, I see posts saying "Ugh, why did I not know this before!" and "I never knew you could do that!" and I honestly ask myself how much are you really moving the needle versus just taking the hit on the 1099 income?

 

[AstroBlasters]

Honest question: I fully understand reporting point rental income, but when it comes to other tax aspects, how much does it really move the needle? I mean, I see posts saying "Ugh, why did I not know this before!" and "I never knew you could do that!" and I honestly ask myself how much are you really moving the needle versus just taking the hit on the 1099 income?

I think it depends on the total dollar value and what marginal (not effective) tax bracket you are already in and if your state/local allow the deduction as well.

I’m not planning on renting any points out, but if I did I would be in the 35% Federal + 10% Oregon State + 1% ACA Surcharge + 2% in Local tax = 48%. So if I were to rent my points at $18pp it would be at ~$14k. I really don’t want to have to loose 48% to tax if I’m legally allowed to claim deductions and expenses to help offset it.

If someone is renting out 50 points and they are in the 12% marginal bracket with no state or local income tax… it may not be worth the trouble to pay for the more expensive version of the tax software or to have the CPA file the form and track the basis moving forward.

 

[DonMacGregor]

I think it depends on the total dollar value and what marginal (not effective) tax bracket you are already in and if your state/local allow the deduction as well.

I’m not planning on renting any points out, but if I did I would be in the 35% Federal + 10% Oregon State + 1% ACA Surcharge + 2% in Local tax = 48%. So if I were to rent my points at $18pp it would be at ~$14k. I really don’t want to have to loose 48% to tax if I’m legally allowed to claim deductions and expenses to help offset it.

If someone is renting out 50 points and they are in the 12% marginal bracket with no state or local income tax… it may not be worth the trouble to pay for the more expensive version of the tax software or to have the CPA file the form and track the basis moving forward.

I'm in the same tax bracket, California equivalent, but looking at the numbers for renting out my leftover points (+/- 100 or so in the odd year, just didn't support the extra hassle. Not to mention AMT rearing its ugly head.

 

[wishicouldgomoreofte]

Davids actively pushed how they pay by paper check and no 1099 when I was looking at rental places. They will get caught and of course, the people who use them will pay the price plus interest and fines.

The 1099 is to report info to the IRS. It is not a payment method. David's does pay by paypal. I did not know they issue paper checks.

 

[wishicouldgomoreofte]

Confused. David's pays by Paypal. (Maybe getting a check is an option, but certainly not the only option.)

If you use them, you can report the income on your tax returns even if they did not send you a 1099.

Yes. A year ago, I emailed David's asking when they would send out the 1099. They replied they don't send it, Paypal does. Then, since the law was new, I was ahead of time. They did not send them out for tax year 2021. So this would have been the first year for Paypal to send the 1099, but now the tax year 2022 is postponed. All the third party pay systems have time now to get it together for tax year 2023, since they will have known of their IRS requirements for 2 years

 

[wishicouldgomoreofte]

My approach is spelled out in this thread:
https://www.disboards.com/threads/filling-out-a-1040-schedule-e-for-rental-income.3874675/
I use a CPA for my taxes but would use the same approach if doing my taxes myself. As I mention in the thread, the fact that DVC is guaranteed to be worth zero on a fixed date in the future means that it is undeniably a depreciating asset. In many years of using this approach neither my accountant nor the IRS has ever complained.

This is a great reference tool. Thank you for posting.

 

[harmon54]

Can someone help me with when I will get the 1099 and what year I have to claim the income - maybe it is both 2022 and 2023. I rented points in 2022 and was paid partial payment but the stay is not until 2/2023 when I will receive the final payment. Do I get a 1099 in 2022 for the partial payment or just one in 2023 when the actual rental occurred. I have seen where some ask how many days in 2022 was it rented but that answer would be zero.
Thanks

 

[GoingSince1990]

Can someone help me with when I will get the 1099 and what year I have to claim the income - maybe it is both 2022 and 2023. I rented points in 2022 and was paid partial payment but the stay is not until 2/2023 when I will receive the final payment. Do I get a 1099 in 2022 for the partial payment or just one in 2023 when the actual rental occurred. I have seen where some ask how many days in 2022 was it rented but that answer would be zero.
Thanks

The 1099 is based on when you receive the payments. So if you do a rental where you are paid $750 in 2022 and $250 in 2023, the $750 will be on your 1099 for 2022 and $250 on your 1099 for 2023. I then deduct expenses allocated 75% to 2022 and 25% to 2023.