Is renting out points worth it on your taxes?

[RivShore]

The brokers are just a middle man, which basically leaves no way for them to avoid money being exchanged. Either they’re buying or selling points on behalf of their customers, or needing to buy whatever they set up to exchange for such points.

But all the money exchanging is within DVCRS, no? I'm not sure exactly how the exchange works with them but if it is simply "this cruise costs 100 points, please make a reservation for our customer x with those 100 points and the cruise is yours". The point giver never sees any cash and would not even know how to value any of it for their taxes, would they?

 

[Sandisw]

I would guess because it is still staying within one system. At no point in those transactions is money exchanging hands (except for administration fee).

eta- vs real dollars moving around:

The brokers are just a middle man, which basically leaves no way for them to avoid money being exchanged. Either they’re buying or selling points on behalf of their customers, or needing to buy whatever they set up to exchange for such points.

This is my understanding as well. It’s an exchange option through the program.

You are converting you points to reservation points which is the currency you get to use for the exchange.


Behind the scenes, the room is taken out inventory and then it’s rented so DVc can pay the other division.

With the swap, the contract for rental, even with a swap, has the owner’s name attached to it and remains in the owners membership

With the exchange, the room leaves the system and goes to Disney’s inventory.

When travel agents book DVC via cash, we see it the exact same way as non DVC inventory. It’s a contract with Disney, and all payments etc are the same.

ETA: Thst is why once converted, they can’t be turned back in to DVC home resort or vacation points to use for DVC bookings vis points.

 

[Sandisw]

But all the money exchanging is within DVCRS, no? I'm not sure exactly how the exchange works with them but if it is simply "this cruise costs 100 points, please make a reservation for our customer x with those 100 points and the cruise is yours". The point giver never sees any cash and would not even know how to value any of it for their taxes, would they?

See my post above. While no money changes hands, there is still a contract with a renter to rent points on your membership.

So, that renters trip is always tied to the owner and their membership.

Thats not what happens when you exchange for a cruise via the DVc exchange program.

 

[Brian Noble]

The point giver never sees any cash and would not even know how to value any of it for their taxes, would they?

As I think was alluded to earlier in the thread, this could be considered a "barter transaction." Barter transactions are taxable events, precisely to close the loophole that trading without cash would otherwise create.

It is not necessary to see the cash in hand, and there are ways to value it---by, for example, getting a contemporaneous quote for the good or service being obtained.

I've said it already, but I would want the advice of a tax accountant before I decided a point swap was not a taxable event. That's particularly true given that one of our members who may or may not be a tax attorney has suggested that this potentially is a taxable event. I'm certainly not going to take the broker's word for it, seeing as how (a) they profit from these transactions and (b) they have no fiduciary commitment to me.

However, I'd never do this in the first place, so for me this is purely hypothetical.

 

[airjay75]

And, to add, valuation is a separate question from whether a transaction is taxable. Just because something is difficult to value does not mean there was not a taxable exchange of one thing for another.

But, with the broker points swaps, valuation is not really a difficult question. They look up the price of the cruise, and then tell you how many points you need to rent based on the broker's current rates they're paying. My understanding from DVCRS is they basically create a debit balance of the amount you owe, and then you can choose which rentals they have available to meet that balance or you can even choose to rent out some confirmed reservations and ask for up to $20/point for your reservation. Then they simply keep the money they receive and put it towards your cruise balance rather paying it through to you.