Selling a contract-do you have to claim on your taxes?

[Simba's Mom]

If I sell a contract, do I need to claim the sale on my taxes (short form, if it matters). And if I do need to claim an income from it, how much do I claim-the entire cost, or just the difference between what I paid for the contract and what I sold it for? And what other fees does the seller incur?

 

[VGCgroupie]

I’m not a tax pro and I haven’t sold. My instinct says it’s similar to how you report the sale of a home (but with no exemption for owning certain period of time)

You can’t make any money without the government wanting their cut.

I’m sure someone with more knowledge will chime in.

 

[VGCgroupie]

Here is a thread with some good links in it.
https://www.disboards.com/threads/capital-gains-tax-on-dvc-resale.3937408/

 

[Brian Noble]

In addition to the links in that thread, this is one I go back to a lot:

https://tug2.net/timeshare_advice/income_taxes_and_timeshares_from_an_accountant.html

I confess I haven't kept track of the capital reserves/improvements line items, but probably I should.

 

[airjay75]

In addition to the links in that thread, this is one I go back to a lot:

https://tug2.net/timeshare_advice/income_taxes_and_timeshares_from_an_accountant.html

I confess I haven't kept track of the capital reserves/improvements line items, but probably I should.

That articles looks pretty accurate to me. Setting aside some of the rules around rental properties, you have a capital gain or loss equal to the difference between the gross proceeds received upon sale and your tax basis in your timeshare interest. And, your tax basis is generally equal to your initial purchase price increased by amounts spent to improve the property, hence the need to keep track of the capital improvements.

Keeping track of the capital reserve increases to your basis probably isn't all that important if you're already at a loss using the purchase price as your tax basis. Becomes a little more important if you're selling for more than your purchased and want to ensure you don't pay any more capital gains taxes than you truly owe.

 

[Brian Noble]

Yeah, I probably don't need to keep track for my developer purchase, but the resale? Maybe.

 

[airjay75]

Agreed - hard to see any direct purchases today ever resulting in a gain. But, possibly resale.

 

[Best Aunt]

You're selling at a gain? Interesting. Good for you.

 

[Stargazer65]

If I sell a contract, do I need to claim the sale on my taxes (short form, if it matters). And if I do need to claim an income from it, how much do I claim-the entire cost, or just the difference between what I paid for the contract and what I sold it for? And what other fees does the seller incur?

Yes, you do and you'll have to use the long form. You and the IRS will be issued a tax form for the sale (1099-S - Proceeds from Real Estate Transactions). If you sold it at a profit, you'll have to pay capital gains tax on the difference. I did this a few years ago. Thankfully I held the contract for a few years so I only had to pay long term capital gains, not short term.

I had to pay a commission to the broker at the sale, and the estoppel fee I think. You'd have to check with the broker to find out details on those costs.