Taxes after selling points

[KelNottAt]

Hello. I've been away from the boards for a couple years, but have come back to the best place I know to ask a DVC question.

If we sell our points, will there be any taxes to pay on the proceeds? Income tax, capital gaines, etc.

Thanks.

 

[chalee94]

if you had a capital gain on the sale, you would owe taxes on the gain.

if you had a loss on the sale, you cannot deduct the loss.

 

[drusba]

It would be a capital gains tax if you make profit although if you sell within less than a year of original purchase, that capital gains tax can be at the same tax level as your ordinary income.

 

[KelNottAt]

So, just to be clear, we paid +/- $20K for the membership. Our sale will net +/- $19,000.

Would that be considered a $1,000 loss for tax purposes. And, therefore, no capital gains?

Sorry to be so dense. Not a tax brain.

 

[drusba]

Yes, it would be a loss that cannot be used to set off other capital gains.

 

[KelNottAt]

OK. I don't think we'd have any other capital gains this year. So, on its own, this appears to be a "tax free" sale.

 

[jarestel]

Tax free sales - I like that spin!

 

[drusba]

Just note that having a loss does not relieve you of reporting the sale and doing calculation and having back-up documentation for the sale to show a loss as part of your tax return.

 

[maberlyne]

Thank you for posting this, I had the almost exact same question.

Just note that having a loss does not relieve you of reporting the sale and doing calculation and having back-up documentation for the sale to show a loss as part of your tax return.

May I ask what you mean exactly about "reporting" and all? I think I'm okay because I went through Timeshare Store (not just to a family member, etc.) so I have the tax paperwork from them. And by back up documentation I just think you mean proof, like proof of the original sale and then sell price? Sorry for the dumb questions, first time with this experience!

 

[Sandisw]

Thank you for posting this, I had the almost exact same question.



May I ask what you mean exactly about "reporting" and all? I think I'm okay because I went through Timeshare Store (not just to a family member, etc.) so I have the tax paperwork from them. And by back up documentation I just think you mean proof, like proof of the original sale and then sell price? Sorry for the dumb questions, first time with this experience!

Even when it is a loss, you have to file the paperwork with the IRS for the sale. At the end of the day, it will show the loss to them, but you still must include that information with your tax return.

 

[VLee]

Just curious (in case I decide to sell in the future)......

Can you deduct any of the yearly maintenance fees or dues as expenses and thereby help reduce any overall profit??

 

[chalee94]

Just curious (in case I decide to sell in the future)......

Can you deduct any of the yearly maintenance fees or dues as expenses and thereby help reduce any overall profit??

i don't think making a profit on the resale price in the future is going to be an issue... (and you cannot deduct losses.)

if you are renting your DVC out, then you can deduct MFs against the rental income when you report that to the IRS.

but if you are using the contract for personal use, then the MFs are just the price you pay to stay in DVC resorts. not deductible.

there is a very small portion of the MFs that relate to property tax and you can deduct the actual amount paid on schedule A if you itemize deductions.

 

[VLee]

Thanks Charles for the response. I have another related question on figuring gain or loss. Does the commission (usually 10% I think) that would be paid to a resale agency get deducted as well?

I possibly would have small profit on an older DVC property purchased for $70/pt that might resell for $80+/pt since it is one of the small (50 pt) contracts which sell for more.

 

[DVCconvert]

Thanks Charles for the response. I have another related question on figuring gain or loss. Does the commission (usually 10% I think) that would be paid to a resale agency get deducted as well?

I possibly would have small profit on an older DVC property purchased for $70/pt that might resell for $80+/pt since it is one of the small (50 pt) contracts which sell for more.

Transaction costs (including sales/broker commissions) will reduce your gain on a sale or, increase your loss on a sale....so yes it's deducted from your net.