If you buy direct and finance through Disney

[chalee94]

Does anyone know if the interest on the loan can be deducted from your taxes? I was told that the annual dues can be but I'm not sure if that is true either.

it depends a little on your personal circumstances also. i think if you already have 2 deductible mortgages, then you would not be eligible to deduct interest paid for a DVC contract. (it should be obvious that paying double the resale price for a contract plus 12% interest to get a small tax deduction is somewhat ludicrous.)

only the property tax component of annual dues can legally be deducted (and only if you itemize). i think it works out that less than 20% of your total annual dues will typically be deductible...

 

[I❤MICKEY]

(it should be obvious that paying double the resale price for a contract plus 12% interest to get a small tax deduction is somewhat ludicrous.)

Are you unable to take a loan to purchase resale? Do you have to pay the full amount without financing? I'm just starting to look into this. I didn't realize.

 

[elfbo]

For resales you have to find your own financing. Many people will chose to get a personal loan, or home equity loan 3-5% interest. If you need financing the only timeshare financing that ive seen recommended is timesharelending.net with interest rates starting at 12.9% and going up from there.

So no easy financing if you buy resales, like you get if you buy direct.

 

[chalee94]

Are you unable to take a loan to purchase resale?

timeshares as a whole don't hold their value very well, so many banks are reluctant to lend with only the timeshare itself as collateral. (many timeshares sell for $1 on ebay and DVC contracts are guaranteed to hit zero at some point in the future.)

with that said, there are a few specialty lenders who do structure their loans on DVC resales such that the interest is eligible for a mortgage deduction. so it can still be an option when buying a resale... (you can also put your house on the line with a home equity-type loan to get a deduction, but i can't recommend that.)

in general, you'd save more money overall if you have access to a personal loan from a bank or credit union that is lower than the rate charged by the timeshare lenders. if i pay 6%-8% on a personal loan, i'm still paying less overall (depending on things like my overall tax rate) than if i'm paying 12% on a deductible loan.

i'd also add that DVC is a luxury which is likely to decline in value over time. ideally, if you need to finance it, you might be better off just renting points.

 

[lodge]

Currently we have a puddle view, which can be modified for a "fireworks" view if we light a flare in the road.... though not of the pixie variant, we seem to have an endless supply of dust around here!
Remember "Calgon take me away!" I change it to "Disney" and leave that homespun dust alone for a while.

 

[Novakm]

I would be very careful about taking a loan to buy DVC. Vacationing at WDW is very expensive. I would not consider DVC unless you had been able to save enough to cover the buy in. I'd love to see the numbers on what % of people who take loans for DVC find out they can't afford it.

 

[Novakm]

I wonder what % of people who take a loan for DVC find out the hard way that they can't afford it?