question about dues

[jdkdorn]

Why do we pay a double payment in Jan? I have a home mortgage and do not pay double one month why do we here?

Thanks for any help understanding this

Judy

 

[PamOKW]

It's not a double payment -- it's to pay the shortfall in estimated 2005 real estate tax. Each year we pay an "estimate" on the upcoming year -- right now we're paying the estimate for 2006. In December they know the "actual" tax. They deduct the actual from the estimate and, if there's a shortfall, we pay it in January along with our regular monthly amount.
Unfortunately, the last few years they've been coming up short and we are getting quite an extra payment in January.

 

[Tiger926]

We've been discussing this on the dues increase thread, not sure if you've seen it yet PamOKW, but I read all of your posts as you really know your DVC stuff, so since you mentioned it, what do you think about the whole understimation tax issue? WebmasterDoc explained a few things, but it still isn't sitting right with me. I don't think that Disney is trying to cheat or anything, it's just that I'm a researcher and planner by nature (I'm a special education department head - lots of planning & foresight needed to make department run smoothly - wouldn't be allowed to play with estimates as Disney does in regards to scheduling, etc. as we would have chaos!), and it would seem to me that they could do a better job of dealing with this issue rather than zapping us with huge increases. Our tax laws are quite different here in Canada and we aren't allowed to do any tax estimating at all - real estate agents and developers (of which my dad is both) must present the most current tax bill with all paperwork or they are at risk of being sued for misinformation. I guess Florida is quite different from where I live in Canada, but what are your thoughts on this issue?

Tiger

 

[Chuck S]

I'm not familiar with FL tax laws, and how real eastate taxes are set. But here in TX we have SEVERAL property taxing agencies, school tax, county tax, and city tax. They all set their rates at different times of the year, and they are due at different times of the year. Even if Disney only has to deal with one agency, if they don't set their actual rate until later in the year, Disney has to "best guess" what that rate will be. If I remember correctly, they've over estimated a few times as well, and we got credits (at least at OKW). I'm think the hurricanes and possibly "security" may have had some unforeseen impact on the tax rate.

 

[kdonnel]

At least in Georgia the counties must follow very specific guidelines for maintaining the tax digest. That includes regular reappraisals of property values.

Perhaps Disney has been getting reassessed yearly. While they might know the millage rate they could not know what the property will be assessed at until the county sends them a bill.

This is not any different then my home, mortgage, and escrow account. Each year the mortgage company makes an estimate of property tax and homeowners insurance. They adjust the escrow portion of my payment to reflect their best guess. At the end of the year if the guess was short and small they give me the option of paying the shortfall or spreading it out over the next 12 months. Disney just always chooses to ask for the shortfall at once.

Just think about how much more dishonest it would be if Disney consistently overestimated. They would get the use of 70,000+ members money interest free. If they overestimated $35 dollars per member they would get an interest free 2.5 million dollar loan each year. They could turn around and invest that money and profit.

I would much rather they come close but miss on their guess. It is a much more effective use of my money.

 

[Tiger926]

Here in Canada we work a bit differently - we can pay our taxes as part of our mortgage which my banker husband says is similar to what you mentioned, but we don't have escrow here, or we can pay our taxes in one lump sum straight to city - they just recently added several other payment options as well: monthly or quarterly. I was having a hard time understanding it until I just talked to my hubby as we pay our taxes straight to the city - our house is on our credit line, so no taxes are part of that; therefore, we always pay the proper amount - there is no estimation since I get my tax bill from the source itself. In regards to the overestimation, I wouldn't want Disney to grossly overestimate either as your scenario wouldn't be good. My thing is that it seems as if they aren't doing a good enough job of coming close enough to estimating what the taxes are going to be. I find it hard to believe based on how much property tax Disney pays that they couldn't do a better job of estimating these amounts. Based on how these dues were presented to us by our guide, I'd still say that they are using this underestimation to their advantage though in terms of a marketing perspective.

Thanks for the tax lesson - much more complicated in the U.S.! Tiger

 

[Chuck S]

I don't know that there is any "marketing advantage" as it obviously catches up in January. Like kdonne said, it also depends on the value of your property. Again, in TX, we receive an appraisal, if we think it is too high, we have to go to the tax office to file a protest and make an appointment for a "hearing." This all takes time and there is no way to know the outcome or to accurately "estimate" your taxes a year in advance.

 

[Tiger926]

I was talking about a marketing advantage for new buyers. This is exactly how our guide presented it to us during our tour - made a big deal of showing how much cheaper SSR was then the other resorts because it was new, and said for that reason the dues wouldn't rise as much. This is misleading period because no one can predict hurricanes or other serious things that will affect whether or not dues go up as you are reminded me of.

We can appeal our taxes here as well, and it's usually based on appraisal rates being too high - no one is ever successful though, so it's a moot point. For the most part, our city has caught every one up to accurate assessments the past 2 years which meant very high increases for old houses, but for those of us with new houses, we are actually right on target or even a bit below in some cases. Like I said, I was very confused because we pay our taxes directly to the city, so I've never dealt with this estimation stuff before and like I said, we have pretty strict rules about declaring taxes in regards to real estate transactions.

Thanks for the explanations, Tiger