Selling DVC & possible tax consequences

[pixiedustforever]

I bought DVC in 2000. The selling price will be more than I paid.
Will I have to report the difference as a capital gain & pay tax on it?

Thanks!

 

[OKW Lover]

Yes.

 

[StitchesGr8Fan]

Yes. You also have to pay tax on the income from renting out points.

 

[cedricandsophie]

The closing attorney will send you a W9 with the selling price shown. You need proof of what you Originally paid and the difference is what is taxed. We just did it this year after selling two contracts in 2019. We made a few thousand on each contract. Just be sure to deduct closing costs from the bottom line too.

 

[chunks]

I bought DVC in 2000. The selling price will be more than I paid.
Will I have to report the difference as a capital gain & pay tax on it?

Thanks!

If you sell it to me...I’ll save you the tax by paying what you paid

 

[Dean]

I bought DVC in 2000. The selling price will be more than I paid.
Will I have to report the difference as a capital gain & pay tax on it?

Thanks!

As noted, yes but there are some adjustments. Whether you actually get a W9 depends but doesn't change the IRS expectations. This article by a timeshare savvy CPA should give you some information https://tug2.net/timeshare_advice/income_taxes_and_timeshares_from_an_accountant.html

 

[BillPA]

Good info, thanks Dean for posting.

 

[DVC92]

As far as capital gain is concerned, can adjustments be made to reduce the gain due to money taken out of our dues for capital improvements? If so, how can that cost be figured, particularly since I just sold an OKW contract from 1992?

 

[HelsBels16]

As far as capital gain is concerned, can adjustments be made to reduce the gain due to money taken out of our dues for capital improvements? If so, how can that cost be figured, particularly since I just sold an OKW contract from 1992?

I think that’s a question for a qualified accountant…

 

[jerseygal]

Add in any closing costs that were paid when purchased to the original cost, that now becomes the “adjusted basis”. The selling price less the closing costs paid on the sale, is the “adjusted sales price”.. the difference between the adjusted basis and the adjusted sales price is capital gain..this it flows to Schedule D on your Federal 1040 where the w capital gain will be reported.

 

[DVC92]

I found an article written by a CPA (https://www.redweek.com/resources/articles/tax-aspects-selling-timeshare) with the following example:

Example:Assume that you purchased a week for $7,000, your purchase closing costs were $500, you sold the week for $8,500, and various selling expenses were $1,300. In addition, a review of the annual budget information you received from the resort indicates that the HOA apportioned $650 of your total maintenance fees to capital reserves during the four years you owned the week.
The cost would be $8,150 ($7,000 + $500 + $650). The net loss on sale would be $950 ($8,500 - $8,150 - $1,300). As explained above, generally, that loss would not be deductible.

Based upon this, the total capital reserves taken out during all the years of ownership adjust the cost to reduce any capital gains profit.

 

[jerseygal]

@DVC92 Is the information for the capital reserves during the period of ownership which was apportioned from the Maintenance Fees easily obtainable from DVC?
Thanks!

 

[Dean]

As far as capital gain is concerned, can adjustments be made to reduce the gain due to money taken out of our dues for capital improvements? If so, how can that cost be figured, particularly since I just sold an OKW contract from 1992?

I found an article written by a CPA (https://www.redweek.com/resources/articles/tax-aspects-selling-timeshare) with the following example:

Example:Assume that you purchased a week for $7,000, your purchase closing costs were $500, you sold the week for $8,500, and various selling expenses were $1,300. In addition, a review of the annual budget information you received from the resort indicates that the HOA apportioned $650 of your total maintenance fees to capital reserves during the four years you owned the week.
The cost would be $8,150 ($7,000 + $500 + $650). The net loss on sale would be $950 ($8,500 - $8,150 - $1,300). As explained above, generally, that loss would not be deductible.

Based upon this, the total capital reserves taken out during all the years of ownership adjust the cost to reduce any capital gains profit.

I believe the article originated on TUG and Dave M. is a very knowledgeable person in this area. I'd go with the advice in the article. Realize that most accountants aren't very knowledgeable about timesahares and will often try to extrapolate from a Condo which is not a good idea.

 

[DVC92]

@DVC92 Is the information for the capital reserves during the period of ownership which was apportioned from the Maintenance Fees easily obtainable from DVC?
Thanks!

I don't know. I do know that at the DVC member website, it currently goes back to 2013. The capital reserve amount for each year is showing. My wife has kept all of our annual dues statements since we purchased so I have full access.

 

[jerseygal]

I don't know. I do know that at the DVC member website, it currently goes back to 2013. The capital reserve amount for each year is showing. My wife has kept all of our annual dues statements since we purchased so I have full access.

Thanks! I believe I have ours in a file as well. Very good information!

 

[mgarbowski]

I don't know. I do know that at the DVC member website, it currently goes back to 2013. The capital reserve amount for each year is showing. My wife has kept all of our annual dues statements since we purchased so I have full access.

Oddly, in my account it only goes back to 2014. I bought in 2011. Might be different for each resort.

 

[gscott8075]

We sold both of our DVC holdings. Upon request, DVC provided statements back to 2000 when we bought which clearly listed the capital reserve contribution. That amount is similar to a capital improvement on a house. If you replace the roof on your house for $10,000, that amount is added to the basis of the property and will reduce any gain accordingly. It was $3200 over 18 years and enough to swing the transaction to a loss so no cap gains were due. (takes the net impact to zero as you cannot deduct losses.) The pain is that you need to file a state tax return in the state the timeshare is located in.

 

[DVC92]

We sold both of our DVC holdings. Upon request, DVC provided statements back to 2000 when we bought which clearly listed the capital reserve contribution. That amount is similar to a capital improvement on a house. If you replace the roof on your house for $10,000, that amount is added to the basis of the property and will reduce any gain accordingly. It was $3200 over 18 years and enough to swing the transaction to a loss so no cap gains were due. (takes the net impact to zero as you cannot deduct losses.) The pain is that you need to file a state tax return in the state the timeshare is located in.

I don't believe you need to file a Florida tax return since Florida doesn't have a state income tax.

 

[jerseygal]

There is no Florida state income tax, thus no Florida State tax, but for DVC, there is Hilton Head, California, and Hawaiii properties, so if one of those properties are sold, and the taxpayers income is such that a return would have to be filed, than the taxpayer would report the capital gain from the transaction on their state income tax return.

 

[Maistre Gracey]

After selling 21 contracts over the course of a couple years, I have no doubt that I goobered this up a time or two.