Renting out DVC points and addonitus

[DVC Doctor]

For rental income, would it be offset by the dues you pay? If you made $4k renting half your points, but paid $4k in dues, would you actually have income to tax?

yes, they don't cancel each other out as going to Disney is not a business and the $4k renting is income

 

[Eldon32]

Given that the point of buying the extra points is to rent to cover dues, you’d never be paying those annual fees. Thus you wouldn’t add them to the investment account, as you’d never pay them either way (or, you spend $32500 for 250 extra points to rent out every year, or you invest the $32,500. Either way, you’re not outlying $1750 on annual dues for those $250 points).

Ah, that’s a good point. Taxes on the rental income weren’t factored into the equation. So if you assume 22% taxes, those extra 250 points will only cover $2925 of annual dues, leaving you with $575 owed each year. This changes the math. If you invest $32,500 and get 8% return with 22% tax bracket and withdraw only $2925 each year, you’d cover ALMOST 24 years of dues. Of course dues will continue to increase during this time, but I don’t have the time right now to try to figure out the real math on all of this.

Of course if you’re buying 500 SSR points and paying $130/point, you’ve overpaid to buy in.

[Edited to correct my mistake in the math above. ]

You're forgetting OP also owes FL/county sales, use, and short-term occupancy tax as well as a license to rent a timeshare since renting a room, or renting the ability to reserve a room are specifically called out in FL tax law.

Note: I'm not qualified in any capacity to give this as advice.

 

[DebbieB]

I currently have 555 BLT points.

However, I usually have a 3 stays at different resorts.

I have addonitus - I have found a few SSR contracts which I can get for around $85pp. So I can use those SSR points for the 7 month window.

I wonder whether its worth renting them out and whether people do.

I would have around 400 BLT or SSR points year to rent out. This would cover help dues.

Thoughts?

Did $85 pass ROFR?

 

[Ruttangel]

I live in UK and have rented once without declaring income, this is because it was under the £1,000 tax free limit per tax year.

Personally I think this is a terrible idea and have no clue why @macman123 has bought so many points when borders are closed and historically exchange rates are poor due to Brexit.
I have bought 2 v.small contracts but tried to compensate exchange rate by offering lower bids.
Buying SSR 1500pts at $100 a point would actually have cost £88,000 at 1.7 (highest rate in last 5 years) but now is £115,000 at 1.3 (2020 avg rate)
That’s a hefty difference and if rates go back up and you have to sell or in this case rent you are really losing out.

 

[gisele2]

I live in UK and have rented once without declaring income, this is because it was under the £1,000 tax free limit per tax year.

Personally I think this is a terrible idea and have no clue why @macman123 has bought so many points when borders are closed and historically exchange rates are poor due to Brexit.
I have bought 2 v.small contracts but tried to compensate exchange rate by offering lower bids.
Buying SSR 1500pts at $100 a point would actually have cost £88,000 at 1.7 (highest rate in last 5 years) but now is £115,000 at 1.3 (2020 avg rate)
That’s a hefty difference and if rates go back up and you have to sell or in this case rent you are really losing out.

This is true if you sell , but if you keep the money to pay your dues in US then it could make sens .

 

[CastAStone]

This is true if you sell , but if you keep the money to pay your dues in US then it could make sens .

One might be able to find an island nation bank happy to hold your money in USD without one having to onshore it to the UK?

Not sure how the laws work there but the reverse is certainly true: it would be fairly straightforward to legally avoid US taxes if I had a small overseas business, kept the money in an LLC on an island with favorable laws, and just used it to pay for things outside the US.

 

[lovethesun12]

This is true if you sell , but if you keep the money to pay your dues in US then it could make sens .

I rented extra points (points were purchased to use not rent but we postponed our trip so had excess) and plan to keep the cash in my USD account. I also plan to invest the Canadian equivalent of the amount into a retirement account. How this will end up in the end I have no idea but I feel like putting it into a retirement account can't be a bad idea since it will be eliminated as income on the Canadian end until I'm in a lower tax bracket.

My lawyer gave me a recommendation for a person who deals with USD/CAD taxes in these cases so I'm currently going that route. Definitely more trouble than it's worth but I have to be able to sleep at night and the information will be good for future reference, lol.