Probably oversimplistic question

[chalee94]

If any CPA's are out there chime in if I am incorrect. I think with taxes of rental income you may deduct the cost of the rental. Say you rent 100 points and after commission to the broker you bring in $1500. Dues are $8.00 so $800 and you could attribute your purchase price divided by total points in the life of the contact times your 100 point rental to get the total cost to you of the rented points. My real math example 37,200/1000=3.72*100=372+800=1172. This would be your basis. You would pay income tax on the $328.

deducting dues, yes. deducting purchase price gets a little more iffy. depends on how aggressive you prefer to be in your tax filings.

 

[chalee94]

Direct prices and resale buyer competition is what creates the floor for pricing not ROFR. What do you think is keeping RIV resale is so high especially since no contracts are being bought back by DVC?

you are correct.

a lot of people aren't good with analysis so they see ROFR and high prices and assume that correlation implies causation.

early in the pandemic, DVC dropped ROFR out of fear that demand would plummet. once it was clear that DVC owners and would-be owners weren't that impacted by the pandemic, they rushed to re-institute ROFR. demand drives prices and high demand gives Disney more options to apply ROFR. ROFR does not drive pricing.

 

[AdamsMum]

Direct prices and resale buyer competition is what creates the floor for pricing not ROFR. What do you think is keeping RIV resale is so high especially since no contracts are being bought back by DVC?

I have no idea what keeps Riviera so high, I thought it would tank because of the resale restrictions.

 

[DVCsloth]

I think Riviera resale is good for people who have plenty of other points and will go often. They can book in the owner window and know they will be going and not much chance of cancelling.
This may be why the resale demand and price is high. It is also a very nice resort with a really good location. I know the Skyliner shuts down quite often but from the one time we stayed there they had busses right away. We were there last July once we saw the Skyliner down, we just headed to the Bus Stop. The only bad thing is if it happens at Epcot and you are all the way in the back of the park. I think you would need to walk all the way to the front and hope that they have a bus waiting. H.S. you are in the same area. I don't think I would ever add on resale at Riviera although you never know.

 

[DisneyRegulars]

So, to be honest, we went with your plan. Buy extra points, rent enough to pay the dues. However, beyond all the financial nuances everyone has brought up, you are missing one major major point. It is extremely hard to rent the points when it would be more fun to use them for yourself. Especially in the early honeymoon phase of DVC. We have owned points for 9 years now, and this year is the very first year we are ever trying to rent points.
So be sure to also consider your willpower available to not use the points yourself because take it from me, it’s very difficult!

 

[cdurham1]

So, to be honest, we went with your plan. Buy extra points, rent enough to pay the dues. However, beyond all the financial nuances everyone has brought up, you are missing one major major point. It is extremely hard to rent the points when it would be more fun to use them for yourself. Especially in the early honeymoon phase of DVC. We have owned points for 9 years now, and this year is the very first year we are ever trying to rent points.
So be sure to also consider your willpower available to not use the points yourself because take it from me, it’s very difficult!

Yeah, I have 2 contracts pending and I am already spending a lot of times looking at availability calendars and points charts picturing all the different vacations I could plan for us. I may be foiling my own plans,

 

[mustinjourney]

I think Riviera resale is good for people who have plenty of other points and will go often. They can book in the owner window and know they will be going and not much chance of cancelling.
This may be why the resale demand and price is high. It is also a very nice resort with a really good location. I know the Skyliner shuts down quite often but from the one time we stayed there they had busses right away. We were there last July once we saw the Skyliner down, we just headed to the Bus Stop. The only bad thing is if it happens at Epcot and you are all the way in the back of the park. I think you would need to walk all the way to the front and hope that they have a bus waiting. H.S. you are in the same area. I don't think I would ever add on resale at Riviera although you never know.

agreed.

Only comment is that I've heard when the skyliner goes down, there are options for busses to pick you up from boardwalk bus station and take you to RIV/POP/AOA/CB. Never done it personally -- but I've heard reports of large swaths of people cramming into BWV b/c of busses when skyliner when down.

 

[mustinjourney]

So, to be honest, we went with your plan. Buy extra points, rent enough to pay the dues. However, beyond all the financial nuances everyone has brought up, you are missing one major major point. It is extremely hard to rent the points when it would be more fun to use them for yourself. Especially in the early honeymoon phase of DVC. We have owned points for 9 years now, and this year is the very first year we are ever trying to rent points.
So be sure to also consider your willpower available to not use the points yourself because take it from me, it’s very difficult!

....especially if you buy an annual pass

 

[crisi]

deducting dues, yes. deducting purchase price gets a little more iffy. depends on how aggressive you prefer to be in your tax filings.

If you EVER use those points yourself, don't deduct the purchase price. It would be best to buy two contracts and rent from one if you are going to both use points and rent them to make sure to keep the whole thing completely separate. Its safest not to deduct the purchase price at all.

For the OP, there is risk in renting points. Maybe you won't get paid. Maybe you might not be able to rent your points. Maybe your renter may trash the room and leave you responsible for the repairs. Also, renting them will involve a little work on your end - especially if you want to forgo a broker to maximize profits. You will post your points to rent, and then have to deal with the responses, some of whom will be asking for impossible things, some of whom are going to want to haggle on price, some of whom are working two or three owners at once and when it comes time to pay, will have found a better deal. At least do yourself the favor of getting into the system and learning it (a banking mistake could cost you all your profits for the year) before deciding to invest to rent.

 

[DisneyRegulars]

Soooo true. If you have annual passes an extra Disney vacation or two a year is so much cheaper than most any other vacation option. That’s definitely part of why we are renting this year, park passes for each trip is just outrageous.

 

[chalee94]

If you EVER use those points yourself, don't deduct the purchase price. It would be best to buy two contracts and rent from one if you are going to both use points and rent them to make sure to keep the whole thing completely separate. Its safest not to deduct the purchase price at all.

Just for the record, I completely agree with you that deducting amortization/depreciation of the purchase price would be a violation of US tax law. But others on the board like to roll the dice.

In case I haven't already said it on this thread, I'm not a fan of buying to rent. Much smarter to just buy the DVC points that you plan to use.

 

[crisi]

Just for the record, I completely agree with you that deducting amortization/depreciation of the purchase price would be a violation of US tax law. But others on the board like to roll the dice.

In case I haven't already said it on this thread, I'm not a fan of buying to rent. Much smarter to just buy the DVC points that you plan to use.

Nor am I. There are far better deals out there for investing your money.

 

[supersnoop]

When I did the math, "investing" in DVC for rental income returned about 1.5%. You should be able to make closer to 12% in residential real estate (with more risk) or about 9% consistently in index funds with much less work.

 

[eplcreel]

My head is spinning trying to follow what everyone is talking about on here. I'm brand new to the DVC board (never knew DVC ever existed before a couple of days ago) and after reading some of these threads I have no idea if its better to buy in on my own or just rent from others needing to get rid of points. I definitely wouldn't consider this as a money making venture.

 

[chalee94]

My head is spinning trying to follow what everyone is talking about on here. I'm brand new to the DVC board (never knew DVC ever existed before a couple of days ago) and after reading some of these threads I have no idea if its better to buy in on my own or just rent from others needing to get rid of points. I definitely wouldn't consider this as a money making venture.

If you are a serious Disney fan who is good to commit long term to WDW onsite travel (with HHI/Aulani as appealing alternatives on occasion), then you should consider buying in.

If you enjoy Disney but want to keep your options a little more open, renting is less of a commitment and can still be a good value for onsite stays (but be aware of the tradeoffs).

It has been a good value for me as an owner but the trends definitely make it problematic for me to recommend buying in now. Still waiting for DVC execs to adjust point charts for 2022 that appear to be fraudulently inflated.

 

[miTnosnhoJ]

Think of it this way.
You are spending your capital to buy access to great lodging at a desirable place at a discount. You have to pay the maintenance.
When you rent out the points, you still pay for the maintenance and upkeep, but somebody else enjoys the great lodging at a desirable place for a discount.
Renting out the points is a good way to stay cash flow neutral if for some reason you can't use the points yourself in a given year. But why would you want to subsidize someone else's vacation for 50 years?