?? for those who have sold their DVC

[cindybelle]

Just wondering what the tax implications are for selling a DVC contract. Is there a percentage you have to pay once sold and you receive your money?
We're trying to figure out what our actual take home amount will be when all is said and done.

 

[Simba's Mom]

Although I could be wrong, we've sold two different contracts, and neither one had any tax implications-at least on our income taxes! The first one we sold on our own, but the second one we used the assistance of a reseller, so we had to pay a % fee.

 

[cindybelle]

I hope you're right!....and that my DH is wrong He's thinking that we'll have to claim it as income, which means we'd have to pay taxes on it.
Anyone else have knowledge on this issue to share?

 

[Kathy C]

We recently sold a small contract at OKW through The Timeshare Store and received a 1099 form with our check. My husband said we have to claim that as income on our taxes next year. Guess we'll find out. Hope he's wrong too!

 

[njmeisje]

I don't know the answer to this question. But wouldn't the sale be subject to Capital gains/losses like any other real estate sale? Would love to hear from folks who bought and sold with a gain in value, in particular. Thanks.

 

[jarestel]

If you made a profit on the sale (after closing costs and fees etc), it is considered income and would usually be taxable. I don't believe time shares fall under the one time home sale tax exemption rule. If you broke even or lost a little, no problem. Just be sure to keep your purchase and sale documents just in case. You wouldn't have to pay the tax at closing, but you will receive a 1099 that needs to be accounted for in your next year's tax return.

Of course, the IRS would probably not believe anybody made a profit on the sale of a timeshare anyway, LOL!

 

[DVC Dude]

I sold one contract via TTS and I got a closing statement and reported the capital gain to IRS and paid 15% long term tax rate.

 

[Cruelladeville]

It's only income if you made money on the sale of the contract. You have to take the sale price of the contract, subtract the price you bought it for, subtract all costs to sell the contract, and the remainder is your profit. That's what you pay taxes on. It's not very much money. I was told that the maintainence could be subtracted from the profit, too, but I couldn't verify that, so I didn't do it. I assume that you purchased the contract with after tax money.

 

[DVC Dude]

It's only income if you made money on the sale of the contract.

If you bought in the past 3-16 years, you are probably into a profit

 

[Cinderella]

Don't you have a capital gains allowance? We have one in the UK - it is over £8000, and if you make a capital gain, you don't pay tax on anything under that amount. Probably someone else will know what the limit is over there.

 

[DLihte]

We sold our BCV points 2 years ago. There was virtually no significant profit because we only kept it a year. My tax person told me maintience cannot be deducted.
We just bought into Disney again. We could not live with out it. Dennis

 

[BillM]

We have sold 5 contracts and had a gain on 3 and 2 losses. All were reported on our income tax. Depending on how long you held them it would be short term or long term gains. We did receive 1099's
After all this we then bought a BWV contract with a use year that suited us better.

 

[Splash Mountain Fan]

Like others stated, the capital gain/loss is calculated by netting your selling price (including selling costs) against your purchase price (including any upfront purchase costs). I do not believe you can offset any gain with maintenance fees. They would not be considered purchase or selling costs. I agree with "jarestel", this transaction would not qualify for a "house sale" exemption.

 

[rigsby25]

How can you prove or disprove selling costs if you don't have any paperwork? I'm not sure where ours is. If I say 15000.00 and don't have proof to back it up, what is the worse the IRS can do? Make us pay on the entire selling price?

 

[Maistre Gracey]

Okay, when we look at the price we bought it for, do we look at the amount before or after the sales incentive?

We are selling a VWL contract that we purchased for $75/point. The incentive at the time was called "Magical Beginnings", and we gave our current years points to DVC for $10/pt off the purchase price.
So, do we use the $75 price, or the $65 price?

We expect (after all commisions/costs) to receive around $70/pt in pocket, so it will swing between a loss and profit depending on which amount we use.

MG

 

[CarolA]

The sale is subject to taxes on the gain. So if you sold for more then your purchase price you probably will owe some taxes.

If you have lost your original purchase paperwork and it was from Disney they can send it to you again (I had to get mine this year for my HH sale) Mine had an incentive, but it was very clear on the paperwork what my "cost" basis was.

If you have "lost" the paperwork but remember the title company on a resale you might give them a call.

I would NOT "add' the maintenance fees to your cost. I think you are going to be in a weak position there. Disney does not give you "capital" improvement costs on YOUR unit and that would probably be all you could use to increase the cost basis. (Maintenace does not increase the cost basis. For example on my house having the A/C guy come for the annual check does not increase the value of the house. Having a new unit with new ductwork installed might!)

Yes, if you can't prove your basis then ALL of the income is taxable.

 

[kend58]

How can you prove or disprove selling costs if you don't have any paperwork? I'm not sure where ours is. If I say 15000.00 and don't have proof to back it up, what is the worse the IRS can do? Make us pay on the entire selling price?

The absolute worst case scenario:

Without any evidence whatsoever that you paid something for the DVC interest. And without any evidence whatsoever that you incurred any sales costs. The IRS can determine 100%l of the sale price of 15,000 to be current year income taxable at short/term capital gains rates (or maybe AMT rates) whichever are higher and give you fines, penalties and interest for failing to report same on your return in a timely manner if you do not do so.

I do not think this scenario will apply very often but it is the worst case I can see.

 

[Anthony1971]

Thats a good question..
on the contract if purchased from Disney it does state you paid the amount before any incentive BUT Dsiney's incentive is almost always to buy back points a years worth of points so the IRS could argue you made a profit on the sale (rent as it is only one year) of these points so then owe them taxes (now short term at a higher rate) on the incentive amount plus a fine and interest.
I would use what you paid
Maybe I should work for the IRS
Being I just added on at SSR and they gave me a $10 incentive if I added on over 50 poinst which would I use... on my original contrcat I had a $10 incentive for them to buy back points so I think I knwo the answer to that