Tax write off?

[jschrots]

Ok, my DH and I are going to join DVC as we have been researching this for about a year, but don't know whether to buy resale or through DVC. We like the idea of a tax write off, but in the end, will it save us more money or is resale the way to go? Any feedback would be great.
Jen

 

[hellerjw]

If you finance the loan through Disney they set it up like a mortgage and for most folks that interest is tax deductible. Most folks can also deduct the small portion of the dues that go toward property taxes. You will need to check with your tax advisor to see about your particular situation.

You can save money going the resale route but you need to make sure you take into account all the resale costs (closing costs, broker fees, etc) vs. any incentives Disney has at the time you plan to purchase. With some of the incentives they have offered going resale doesn't save very much, if any, with some of the newer resorts. It all comes down to whether the resale contract has any banked points vs. being stripped, the price per point, etc. The only way I can think of to get the tax advantages going resale is if you fund the purchase with a home equity loan/HELOC.

 

[jerseygal]

The only "wrie off" to being a DVC member, is that "interest" is deductible, basically, the same as interest being deductible on your primary home or a second home..

Your maintenance fees are normally not deducted....

Whether you buy resale or buy directly from DVC, only the interest will be deductible....You must decide if any incentives directly offered through DVC outweigh any resale deals out there!

Hope that helps!

 

[CarolA]

I deduct the portion of my MFs that goes to pay the property taxes.

*Tax advice received from posters like me is not exactly "bulletproof" Always consult your personal advisor... Do you REALLY want to standing in front of the IRS saying "but CarolA on the DIS told me it's deductible" LOL!

 

[Kuzco]

* Do you REALLY want to standing in front of the IRS saying "but CarolA on the DIS told me it's deductible" LOL!

I guarantee that is a valid defense.

 

[jschrots]

Thanks everyone. I know that only the intrest is tax deductable and Disney is still offering a nice deal with AKV with the developer points. We are looking to start small with 160 points and right now with resales, the price is about $3,000 less but you don't get the "extra" points, most are just the 160 for this year and then again there after.

Maybe going through Disney directly is the way to go, since we love Animal Kingdom and we have 3 small children so we know we would use DVC A LOT over the years to come.

Jen

 

[TXdeVille]

Does DVC send you a year-end report of interest payments made like your mortgage company does? And how do you know how much of your maintenance fees go towards the property taxes?

TIA

 

[CarolA]

Does DVC send you a year-end report of interest payments made like your mortgage company does? And how do you know how much of your maintenance fees go towards the property taxes?

TIA

Yes you get the end of the year statement showing your interest.

The MF dues statement each year shows you the actual and estimated property taxes for the year prior

 

[jschrots]

So Disney sends you a letter at the end of the year. Is this only if you buy through Disney or resale too, even if you finance through a different source?

 

[CarolA]

So Disney sends you a letter at the end of the year. Is this only if you buy through Disney or resale too, even if you finance through a different source?

No matter how you pay you get the annual member fee statement.

Disney of course does not know what you paid in interest to anyone else so they only send you that information if you finance via them.

Also, just a warning. Most of the finance plans used by resale companies are probably not deductible IMHO. If you look at the loan papers they are personal loans not mortgages secured by the real estate investment. Unless the real estate is tied to the loan then it's not a deductible mortgage.

Now a lot of folks use Home Equity loans on thier primary home which means the interest may be decutible.

 

[jerseygal]

What percent approximately of MF is property tax? I would guess a low percent??????

Thanks!

 

[hellerjw]

I don't have last year's statement in front of me but I believe the property tax portion is only around 10% of the total yearly dues.

I do remember that they over estimated the property taxes for last year (most likely since the AKV units had just been completed at Jambo House) so we got a credit applied towards this year's dues.

 

[JimC]

I would not advise purchasing DVC based on a tax analysis of potential deductions. There are really two criteria that are fundamental to satisfy.

1. Is this program right for you and how you vacation?

2. Can you comfortably afford the purchase and annual dues and the dues if they increase at about the rate of inflation over many years? Ideally both should be without incurring debt.

 

[Deb & Bill]

Ok, my DH and I are going to join DVC as we have been researching this for about a year, but don't know whether to buy resale or through DVC. We like the idea of a tax write off, but in the end, will it save us more money or is resale the way to go? Any feedback would be great.
Jen

DVC will not save you money. In the end, you will spend a lot more money at WDW and on vacations.

Look at it as partially prepaid vacations. You still need to pay the annual member fees.

 

[Blahnde]

I would not advise purchasing DVC based on a tax analysis of potential deductions.

I agree wholeheartedly with JimC. However, while I would not necessarily include it as part of a purchase analysis, as a tax professional myself I see clients every year who have not fully taken advantage of all the tax incentives available to them. Therefore to hear owners interested in this benefit (even if it is a SMALL benefit for most!) is refreshing.

I will also take CarolA's advice to the next level by clarifying that as a taxpayer you are ultimately responsible for the content of your return. Therefore, if you are unhappy with the advice you are receiving, get a new professional. You and your professional are a team in making the decisions and defending those decisions, but it is your bank account and home (not your tax professional's!) that the IRS will sieze if they disagree with those decisions.

Blahnde

 

[adminjedi]

I submit everything to our CPA. I pay way too much in taxes not to use every legal opportunity to keep my money - no matter how "small" of an amount.

 

[crisi]

I deduct the portion of my MFs that goes to pay the property taxes.

*Tax advice received from posters like me is not exactly "bulletproof" Always consult your personal advisor... Do you REALLY want to standing in front of the IRS saying "but CarolA on the DIS told me it's deductible" LOL!

Your advice is better than many peoples.

Tax deductions on interest are complicated - so DO check with your own tax professional or do your own reading of tax code. For MOST people, you will be able to deduct the interest if it is secured by property - a loan through DVC will do that - you can also use a home equity loan - that interest would also (likely, but do check) be tax deductible and might be a good choice on a resale (depending on how much equity you have, how comfortable you are putting your own home at risk in this economy, etc. I wouldn't touch my home equity with a ten foot pole until things settle down after the inaguration and then I'd reevaluate.)

Property taxes on 160 points is maybe $100 bucks - so a $30 savings or so in taxes each each at a 30% rate. You aren't talking big bucks.

Things like AMT and deduction limits may crimp even that savings.