Question about Selling

[lionqueen]

Hi. I'm a relatively long time DVC member (since 2001) but am far from an expert so was looking for people's ideas/thoughts. I have 2 OKW contracts and 2 SSR contracts all through resale. Three of the four contracts are grandfathered in before all the DVC changes that have been made over the years. My husband wants to look into selling our 2 OKW contracts (that are grandfathered in) and "upgrade" to SSR through resale to get the extra 12 years on the contract. We are relatively young (early 40's with a young family) and believe we will continue to use our contracts past the 2042 expiration date of OKW. I know the major points like we will pay a 8.5% commission for selling and that the new contract will have more restrictions on it and will pay closing costs again. I guess I"m looking for views on what will I be losing by selling my grandfathered contracts? I would still have one contract that would be grandfathered in. Are there other costs that I"m not thinking of? Once I sell my contracts do I owe taxes on the money that was generated from the sale or would I be able to take the entire purchase price (minus the 8.5%) towards a new purchase? Is there anything pro's vs cons that I'm not thinking of? Thanks for any input you are willing to give!!

 

[chalee94]

Once I sell my contracts do I owe taxes on the money that was generated from the sale?

You'd owe taxes on the profit, if any.

You'd take the proceeds from the sale (net of selling commissions) less your original purchase price paid.

As long as you still have one grandfathered contract for perks, I don't see any issues. The new SSR contracts can only be used at the original 14 resorts but that's not bad.

 

[gscott8075]

Taxes are based on the gain on the sale. To figure that out, assuming you used the points for personal use and did not rent them out:

Original purchase price - purchase settlement fees
- part of dues allocated to capital reserves each year
- Sales price
- Commission
- Settlement fees (Disney ROFR/Estoppel)

A positive would be a taxable long term gain, a negative is a loss. You cannot write off a loss.

Chances are you are at a loss with the capital reserve amount factored in. You can ask DVC for a report of the dues you paid by year - it will help your tax person.

 

[zavandor]

Are you sure you want to spend money now for points that you won't get until 23 years from now? it's a long time and many things may change. They might for example open a resort you like much more than SSR and you want to own and at that point you'd have to sell again to purchase it, loosing money on the transaction twice.
Also, the OKW extension situation is a mess, with more than half of the resort currently set to return to Disney. At that point it's possible that to avoid to pay all those MF and being stuck with so much inventory, they might offer an extention again and those would be considered direct points (I think). You're not switching resort because you want the 11 months advantage there. If the intent is to keep points to "sleep around", then I would simply wait and see what happens when 2042 approaches.

 

[kniquy]

I would actually keep the contracts and in 23 years when you might want to continue to travel to WDW you could then buy more points. At that point you will be in your 60's who knows what your financial or health situation will be at that point in time. You may want to travel less and just having the SSR contract will suffice. It doesn't really sound like you are gaining much buy just selling to re buy for a longer contract.

One down side to re-buying resale contracts at SSR is that you will not be able to use those points at any of the new resorts. This may or may not be a deciding factor for you, but something to consider.