The Vilification Of Renting?

[CarolMN]

I don't see a lot of difference between a member using a "broker" to rent his/her points and Disney using independent Travel Agents or web booking engines (like Travelocity or Expedia) to rent their rooms for cash.

Can't imagine how they could legally stop a third party from offering services to individual members, so I agree they would have to take action against the individual members.

If I ever have to rent my points, I would seriously consider using an experienced "points broker" even if he or she needs to be temporarily added to my account as as Associate. He/She would certainly know how it works, and I don't have to find a renter or act as a Travel Agent. To me it would be worth $3 or $4 a point if I were in a bind. I've not read even one hint anywhere that a points broker has ever done anything dishonest or misused another member's account.

If I had to rent, I'd certainly consider a third party points broker. Of course, I'd want one who had been around a while, knew what he/she were doing and had good references. Again, it would be worth more to avoid the stress of dealing with an owner who may be inexperienced or too busy to answer my questions.

Finally, since DVC no longer allows unlimited transfers (and thus has at least limited point morphing and illegal point extensions) I can't see any difference between renting that is allowed and commercial renting.

IMHO, pretty much anything DVC does to limit commercial renting will negatively impact members who do not rent. My opinion. I know some think differently.

 

[Blahnde]

If I read the information on the site correctly, it looks like DVC members who rent out their points should be collecting the tax.

The main reason that I disagree with this statement is that we as members are not charged sales/use/hotel tax to use our points. If DVC Member Services does not have to collect tax from us when we make reservations with points, something tells me that we as owners should not have to collect it from renters either. Didn't we already pay these taxes when we purchased the points? Isn't that part of the closing costs? And if so, why would we have to pay it again?

Look at it this way: if I bought a t-shirt with the purpose of selling it to you then I would not pay the sales tax, but when I sold it to you you would pay the sales taxes. But, if I bought a t-shirt for personal use (like DVC points) I would pay the sales tax. I would only charge you tax if I sold it to you for a profit, and then I would only have to charge tax on the profit margin, not the entire purchase price. So if I already paid the tax on my DVC points, why would I have to charge you the tax again. Now, if I SOLD my points for a profit I would have to pay sales tax, but again, that is part of the closing costs.

And since it says over and over in the literature that points have no value, how could renting points generate a profit margin on which to charge tax? Renting generates income, for which you pay personal income tax, but it does not necessarily generate gain, which is what you would have to have in order to calculate and pay sales/use/hotel tax.

I admit I could be wrong about this interpretation, but it doesn't make sense for there to be double taxation in this situation. What I do know is that I would NOT want to take on Florida to figure it out!

Blahnde

 

[RobDoc]

The main reason that I disagree with this statement is that we as members are not charged sales/use/hotel tax to use our points. If DVC Member Services does not have to collect tax from us when we make reservations with points, something tells me that we as owners should not have to collect it from renters either. Didn't we already pay these taxes when we purchased the points? Isn't that part of the closing costs? And if so, why would we have to pay it again?

No, we did not pay any sales tax on our purchase - we annually pay property taxes thru our dues. DVC does not collect tax from us, since we are using our points. CRO however does charge the FL room tax when they rent DVC rooms as chas reservations, just as we members also pay the tax on cash reservations made thru MS.

Look at it this way: if I bought a t-shirt with the purpose of selling it to you then I would not pay the sales tax, but when I sold it to you you would pay the sales taxes. But, if I bought a t-shirt for personal use (like DVC points) I would pay the sales tax. I would only charge you tax if I sold it to you for a profit, and then I would only have to charge tax on the profit margin, not the entire purchase price. So if I already paid the tax on my DVC points, why would I have to charge you the tax again. Now, if I SOLD my points for a profit I would have to pay sales tax, but again, that is part of the closing costs.

Paying the FL room tax has nothing to do with profit. It is a consumer tax for using the property and is based solely on the amount of the actual charge.

And since it says over and over in the literature that points have no value, how could renting points generate a profit margin on which to charge tax? Renting generates income, for which you pay personal income tax, but it does not necessarily generate gain, which is what you would have to have in order to calculate and pay sales/use/hotel tax.

Your renter is not actually renting points (you are correct that they have no "value", especially to a non-member) - he/she is renting a reservation made using those points and is using $$ to pay for that reservation just as cash reservations made thru MS will have the tax added. The FL room tax and state/Federal income tax are two entirely different issues and obligations. The income tax obligation can be offset by the expenses incurred - if you paid $5 per point in maintenenace fees and charged $5 per point for the rental , your "costs" would offset the income and no income tax would be incurred - BUT - you would still owe the room tax to the state of FL as that is based on the actual charge and not the profit margin.

I admit I could be wrong about this interpretation, but it doesn't make sense for there to be double taxation in this situation. What I do know is that I would want to take on Florida to figure it out!

Blahnde

Good luck taking on Florida on the room tax issue or on the income tax issue! Please let us know how that turns out!

 

[JimMIA]

I would only charge you tax if I sold it to you for a profit, and then I would only have to charge tax on the profit margin, not the entire purchase price.

Sales tax just does not work that way.

Florida has a sales tax of 6%, and some counties have added 1/2% to 1% to that. I believe the sales tax in Orange County is 6.5%.

Sales tax is computed on the entire sale, whether you make any profit or not. If you sell something for $10 and lose $3 on the transaction, you still collect sales tax on the full $10.

Orange County also has a room tax, which also in computed on the entire sale.

 

[DVC Mike]

The tax that DVC members should be collecting and paying is 12.5% and consists of the Florida State Sales Tax of 6.5% and the Orange County Occupancy Tax of 6%.

It seems like DVC members who rent their points at WDW resorts should be remitting payment to the state and county. If anyone feels otherwise, the best course of action would be to contact the state and county and ask. Or, contact a tax professional and ask them.

 

[Brian Noble]

The big difference is that if you use Schedule C. you will have to pay Self-Employment tax (Social Security and Medicare) on the income. With Schedule E (which is designed for passive rental real estate income) you do not have to pay this extra 15.3%!

Well, first half of the SE tax can be deducted, so that reduces the effective rate to 14% and change.

Second, the amount you pay depends on whether you are maxing out SS taxes on any other "normal" wage-earning income streams. For example, my wife and I each have sole proprieterships---she is a physician, and I am a consultant. I also have a "day job" that pays me a 'regular' wage that (happily) exceeds the annual limit on social security taxable wages. So, my Sched C income is only subject to the additional medicare portion (2.9%). But she pays the full rate, lacking a suitable day job.

That said, you are right, it is Schedule E. The other exception appears to be real estate agents---for them, renting is never passive. I haven't rented yet, so I haven't faced this particular issue with my tax advisor.

 

[Blahnde]

Quote:
Originally Posted by Blahnde
I would only charge you tax if I sold it to you for a profit, and then I would only have to charge tax on the profit margin, not the entire purchase price.

Sales tax just does not work that way.

I cannot speak about Florida law (and contrary to what I initially wrote I do NOT want to take them on!) or their sales tax policies, but in California it does work this way if you are making a private sale, and renting points is a private transaction. In California businesses must remit sales tax based upon customer purchase price regardless of profit and they must have a sales permit to do it. But individuals who purchase an item for personal use (points!) would only charge sales tax on the portion of the price above the original purchase price. This is because the individual already paid sales tax on the original sale.

In my example, if I bought a t-shirt for $5 for personal use I would pay sales tax on the $5. If I then sold it on eBay (or at a garage/yard sale, or to a friend, or at a consignment shop) for $4 I would not have any sales tax due. However, if I sold it for $6, I would need to remit sales tax on the $1 differential. And if you say, "Well a t-shirt and points are not the same," I would agree and say that a points rental seems more like a service, in my opinion, on which there is no sales tax at all!

And what part of, "I could be wrong..." did y'all not get!?! I said this was my interpretation; I did not say it was based upon California law, but it is. I agree with DVC Mike that the only way to know is to ask the State of Florida's equivalent to California's Board of Equalization.

Blahnde

 

[Plutofan]

No, we did not pay any sales tax on our purchase - we annually pay property taxes thru our dues. DVC does not collect tax from us, since we are using our points. CRO however does charge the FL room tax when they rent DVC rooms as chas reservations, just as we members also pay the tax on cash reservations made thru MS.

Also MS does charge use tax when DVC members get a cash reservation. They also charge use tax when they rent off our points that were used for a trade. If we use our points for our own personal vacations there is no use tax since we own.

 

[Blahnde]

DVC does not collect tax from us, since we are using our points.

The root of my question is why?

Why if we are using points does DVC not collect sales and occupancy tax from us? Because maybe if I understood why DVC does not charge us sales and occupancy tax I could see why (or why not!) a renter would need to pay sales and occupancy tax. If DVC does not collect tax from us, why would we have to collect tax from a renter? Same point usage whether it is me or a renter using the points, right? Somehow if I use the points Florida is okay with no sales tax and no occupancy tax from me, but if it is a stranger in the room, now they want their share?

I get the income tax part, but I really cannot understand why if there is an owner in the room we don't have to pay sales and occupancy tax, but if a financial transaction happened (which is taken care of by income tax) and a stranger is in the room (using the same points I would have used without having to pay sales and occupancy tax!), why do they have to pay sales and occupancy tax? The room is occupied either way, and I didn't make a sale, I just rented. Renters (in California) do not have to pay any tax on their rent; why would timeshare renters? The owners have to pay income tax on the rental income, but the renter doesn't pay sales or use tax. And as I said the room is occupied either way, so why charge a renter occupancy tax when we do not have to pay it when we make a reservation for ourselves?

Blahnde

 

[Plutofan]

The root of my question is why?

Why if we are using points does DVC not collect sales and occupancy tax from us? Because maybe if I understood why DVC does not charge us sales and occupancy tax I could see why (or why not!) a renter would need to pay sales and occupancy tax. If DVC does not collect tax from us, why would we have to collect tax from a renter? Same point usage whether it is me or a renter using the points, right? Somehow if I use the points Florida is okay with no sales tax and no occupancy tax from me, but if it is a stranger in the room, now they want their share?

I get the income tax part, but I really cannot understand why if there is an owner in the room we don't have to pay sales and occupancy tax, but if a financial transaction happened (which is taken care of by income tax) and a stranger is in the room (using the same points I would have used without having to pay sales and occupancy tax!), why do they have to pay sales and occupancy tax? The room is occupied either way, and I didn't make a sale, I just rented. Renters (in California) do not have to pay any tax on their rent; why would timeshare renters? The owners have to pay income tax on the rental income, but the renter doesn't pay sales or use tax. And as I said the room is occupied either way, so why charge a renter occupancy tax when we do not have to pay it when we make a reservation for ourselves?

Blahnde

We do not pay use tax if we use our own points for our own personal use. If we rent out that is different. For example you dont not pay sales tax on the purchase of your house but in most states including Florida you would pay use tax if you rent it out or a portion of it out. There is a difference between being an owner and a renter.

 

[Blahnde]

We do not pay use tax if we use our own points for our own personal use. If we rent out that is different. For example you dont not pay sales tax on the purchase of your house but in most states including Florida you would pay use tax if you rent it out or a portion of it out. There is a difference between being an owner and a renter.

I had a feeling this is what someone would give as an answer.

According to DVC personal use is for me, my relatives (who are not owners), and my guests (who are not owners.) Based purely on ownership, everytime I make a reservation for someone other than me or my husband (the only owners) the occupants should have to pay sales/use/occupancy tax since they are not owners. Obviously this does not happen!

And you also used the term "personal use." Based on "personal use" as defined by Disney, unless DVC decides it is commerical use (over 20 reservations in a year or another "pattern of activity"), ALL activity is "personal use" and therefore no one (including renters!) is subject to sales/use/occupancy tax.

So either Aunt Sally needs to pay tax to use my points for free based upon "ownership," or no one, including my hypothetical "casual" renters, pays based upon "personal use." Is it "ownership" or "personal use"???

Blahnde

 

[RobDoc]

The root of my question is why?

Why if we are using points does DVC not collect sales and occupancy tax from us? Because maybe if I understood why DVC does not charge us sales and occupancy tax I could see why (or why not!) a renter would need to pay sales and occupancy tax. If DVC does not collect tax from us, why would we have to collect tax from a renter? Same point usage whether it is me or a renter using the points, right? Somehow if I use the points Florida is okay with no sales tax and no occupancy tax from me, but if it is a stranger in the room, now they want their share?

I get the income tax part, but I really cannot understand why if there is an owner in the room we don't have to pay sales and occupancy tax, but if a financial transaction happened (which is taken care of by income tax) and a stranger is in the room (using the same points I would have used without having to pay sales and occupancy tax!), why do they have to pay sales and occupancy tax? The room is occupied either way, and I didn't make a sale, I just rented. Renters (in California) do not have to pay any tax on their rent; why would timeshare renters? The owners have to pay income tax on the rental income, but the renter doesn't pay sales or use tax. And as I said the room is occupied either way, so why charge a renter occupancy tax when we do not have to pay it when we make a reservation for ourselves?

Blahnde

The rules, at least in FL, are different for long term rentals vs short term renters. In this case, DVC renters (and all WDW hotel reservations) are subject to sales tax and room taxes while renters with a lease may be exempt. In addition, it also appears that brokers for such rentals are also subject to the requirement to register, collect and submit the FL room taxes.

DVC members are owners and do not pay anything for their reservations to DVC when using points. (If we make a cash reservation, we are subject to the taxes). Since points have no real value, there is nothing on which to base and collect taxes - but any transaction where the reservation is based on a cash payment will incur the taxes and the responsibility to collect and submit the taxes.

From the FL Dept of Revenue:

Sales tax is due at the rate of 6 percent on charges or room rates paid in exchange for the right to use or occupy living or sleeping accommodations. Florida law refers to these living or sleeping accommodations as "transient accommodations."

Persons who rent or lease any of the following types of transient accommodations must collect sales tax and remit it to the Department of Revenue:

Hotel or motel
Apartment house or any other multiple unit structure (for example: duplex, triplex, quadraplex, condominium)
Rooming house
Tourist or mobile home court (for example: trailer court, motor court, recreational vehicle camp, fish camp)
Single-family dwelling
Garage apartment
Beach house or cottage
Cooperatively owned apartment
Condominium parcel
Timeshare resort
Any other house
Vehicle or other structure, place, or location held out to the public to be a place where living quarters or sleeping or housekeeping accommodations are provided to transient guests in exchange for payment.
Some counties impose a discretionary sales surtax, local option tax, tourist development tax, convention development tax or tourist impact tax on taxable rentals of transient accommodations. For more information, ask the Department for the Discretionary Sales Surtax brochure (Form GT-800019) and a list of surtax counties and rates (Form DR-15DSS). To obtain these and other forms, see "For Information and Forms" below. For information on other taxes, please see Sales & Use Tax Rate Charts.

What is Exempt?

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Certain leases and rentals are exempt from sales tax. The owner or owner's representative is required to keep documentation to support the exempt transaction. The following are exempt:

Rental charges or room rates paid by a person who has a signed, bona fide written lease for a period of continuous residence longer than 6 months. In the absence of a written lease, if a person has continuously paid the applicable tax on the rental charges or room rates due at that location, for the first six months subsequent charges are tax-exempt.
Rental charges or room rates paid by a full-time student enrolled in an institution offering postsecondary education. A written declaration of an appropriate official of the student's institution, documenting that the student attends the institution full time, is proof of the student's full-time enrollment.
Rental charges or room rates paid by military personnel who are currently on active duty and present in the community under official orders. The military personnel must provide the following documents to support the exemption:
A written declaration stating that he or she is currently serving on active duty in the U.S. armed services.
A copy of the official orders supporting the active duty status of the military personnel and making it necessary to occupy the accommodation.
Rental of accommodations in a migrant labor camp.
Trailer Camps, Recreational Vehicle Parks, and Mobile Home Parks

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Who Must Register to Collect Tax?

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The owner of living or sleeping accommodations is required to register each taxable accommodation separately. You can register to collect and/or report tax via the Department's Internet site. Go to www.myflorida.com/dor and click on e-Services. If you do not have Internet access, you can complete a paper Application to Collect and/or Report Tax in Florida (Form DR-1). Obtain Form DR-1 from your local DOR service Center or one of the contacts listed in "For Information and Forms."

If the property owner uses a real estate brokerage firm, other entity, or other person (not an employee) to collect or receive rent or license fees on behalf of the owners (lessors), then such firm, entity, or person must also register. Agents who are registering multiple properties for management and rental should complete an Application for Collective Registration for Rental of Living or Sleeping Accommodations (Form DR-1C). A separate application is required for each county where property is located.


Tax Law
Call Taxpayer Services to request a copy of Rule 12A-1.061, Florida Administrative Code, Rental of Transient Living Accommodations. Tax rules are also available on the Department's Internet site. Tax laws are also available in the Florida Tax Law Library.


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I had a feeling this is what someone would give as an answer.

According to DVC personal use is for me, my relatives (who are not owners), and my guests (who are not owners.) Based purely on ownership, everytime I make a reservation for someone other than me or my husband (the only owners) the occupants should have to pay sales/use/occupancy tax since they are not owners. Obviously this does not happen!

And you also used the term "personal use." Based on "personal use" as defined by Disney, unless DVC decides it is commerical use (over 20 reservations in a year or another "pattern of activity"), ALL activity is "personal use" and therefore no one (including renters!) is subject to sales/use/occupancy tax.

So either Aunt Sally needs to pay tax to use my points for free based upon "ownership," or no one, including my hypothetical "casual" renters, pays based upon "personal use." Is it "ownership" or "personal use"???

Blahnde

You are confusing "personal use" as defined by DVC and FL tax law. I'd expect that if you challenged DVC on this, you might get a response that "personal use" ends when you expect payment for the reservation. Since renting is allowed by DVC, this is not a contradiction at all. "Personal Use", IMO, is just as it sounds and would incur no tax liability. Renting is another issue altogether and does seem to involve the laws of the state of FL - an entity that expects to recieve tax for such activity. This has nothing to do with "commercial purpose" at all - that is another DVC definition. It has everything to do with the definition FL has offered for the tax liability. I am confident that if FL required DVC to collect sales and room taxes for members using points, they would certainly do so.

In this case however, members who rent are acting as a rental agent independant of DVC and, as such, may be liable to collect and submit taxes to the state of Florida.

 

[Blahnde]

The rules, at least in FL, are different for long term rentals vs short term renters. In this case, DVC renters (and all WDW hotel reservations) are subject to sales tax and room taxes while renters with a lease may be exempt. In addition, it also appears that brokers for such rentals are also subject to the requirement to register, collect and submit the FL room taxes.

So based upon this, unless the owner is on the property during the stay, the occupant should be charged sales and occupancy tax. So why doesn't DVC (since they know who is in the room!) collect tax when we make a reservation that we (the owners) are not on? DVC is the broker in this situation and it is there obligation to uphold this law, right? They know the owner is not using the points, and therefore tax must be paid. It seems to me that if this is truely the way to interpret this law, then DVC is in hot water with Florida! And if it is a "free" rental to a relative, for example, would the tax due be based upon the "going rate" for the room? Clearly just because money doesn't change hands doesn't make collecting the tax stop since the villa still has value.

Blahnde

 

[Plutofan]

So based upon this, unless the owner is on the property during the stay, the occupant should be charged sales and occupancy tax. So why doesn't DVC (since they know who is in the room!) collect tax when we make a reservation that we (the owners) are not on? DVC is the broker in this situation and it is there obligation to uphold this law, right? They know the owner is not using the points, and therefore tax must be paid. It seems to me that if this is truely the way to interpret this law, then DVC is in hot water with Florida! And if it is a "free" rental to a relative, for example, would the tax due be based upon the "going rate" for the room? Clearly just because money doesn't change hands doesn't make collecting the tax stop since the villa still has value.

Blahnde

Actually the DVC member is the broker when they rent out the points. DVC just handles making the reservation. They do not collect the money. When Disney does do the actual reservation and collects the money then they do collect and remit any applicalble taxes to the state and county. If Disney does not collect the money they would not want to be involved. If we ever get to a situation when Disney decides to rent out points for owners then they would collect the tax on their behalf and remit to the taxing authorities as an agent.

 

[RobDoc]

So based upon this, unless the owner is on the property during the stay, the occupant should be charged sales and occupancy tax. So why doesn't DVC (since they know who is in the room!) collect tax when we make a reservation that we (the owners) are not on? DVC is the broker in this situation and it is there obligation to uphold this law, right? They know the owner is not using the points, and therefore tax must be paid. It seems to me that if this is truely the way to interpret this law, then DVC is in hot water with Florida! And if it is a "free" rental to a relative, for example, would the tax due be based upon the "going rate" for the room? Clearly just because money doesn't change hands doesn't make collecting the tax stop since the villa still has value.

Blahnde

NO - the only situation where the tax is applicable is if the owner has received payment for the reservation. In that case, the owner has the responsibility to additionally collect the taxes and submit them to the state of Florida. If you are charging your family for the reservation, then you are supposed to also collect the taxes - if not, there is no tax involved. DVC is NOT the broker - the owner renting the room is the broker. (Another reason why DVC will not get invloved in rental transactions - including providing confirmation to renters).

DVC has no responsibility to collect a tax when they are NOT the one being paid for the reservation. Whomever is accepting payment for the reservation is liable to the state of FL.

Some states have begun taxing timeshare owners, so all of this could change in the future in FL. If FL suspects that it is missing out on significant tax income from timeshare rentals, it could easily change the laws quoted above and demand that ALL timeshare reservations would incur the tax. In that situation, DVC would be involved and ALL member reservations would be affected - but until that time, it might be best to just abide by the laws presently in place.

Presently, the tax laws only affect those who rent reservations - whether that's Disney, Embassy Suites, Gaylord, Holiday Inn or a DVC member renting reservations to others.

 

[Blahnde]

NO - the only situation where the tax is applicable is if the owner has received payment for the reservation.

Why is the tax only applicable when an owner receives payment? Isn't the tax applicable if anyone other than the owner stays on the room, regardless of payment? As an owner, I cannot be renter ... it is not possible. But anyone else is, by definition, a renter whether money changes hands or not. They do not own and yet they use and occupy the room ... they should be subject to use and occupancy tax. Only owners (and leaseholders over 6 months) are not subject to these taxes, right? That means everyone else is. And just because my Aunt Sally did not pay me for the room, doesn't mean that the room doesn't have value or that she did not receive a benefit, right? So she owes use and occupancy tax.

Therefore, if the owner is not staying in the room, the reservation should be subject to use and occupancy tax, right? And as the broker for the owner, DVC is the one responsible for paying the tax. DVC acts as the owner's broker because they "manage" the reservation for the owner. I cannot make a reservation without DVC Member Services, and they broker the reservation regardless of whether it is for me or a guest. And as the broker they are responsible for determining who must pay the tax, how much they must pay, and for remitting the collected taxes.

I understand that if I collected money for renting that those funds are subject to use and occupancy tax, and since DVC was not involved in the financial transaction they would not be responsible for remitting those collected taxes. But as stated above, just because money does or does not change hands should not change or eleviate DVC's obligation to charge use and occupancy tax whenever a reservation is made where the owner is not in the room.

Blahnde

 

[RobDoc]

Why is the tax only applicable when an owner receives payment? Isn't the tax applicable if anyone other than the owner stays on the room, regardless of payment? As an owner, I cannot be renter ... it is not possible. But anyone else is, by definition, a renter whether money changes hands or not. They do not own and yet they use and occupy the room ... they should be subject to use and occupancy tax. Only owners (and leaseholders over 6 months) are not subject to these taxes, right? That means everyone else is. And just because my Aunt Sally did not pay me for the room, doesn't mean that the room doesn't have value or that she did not receive a benefit, right? So she owes use and occupancy tax.

Therefore, if the owner is not staying in the room, the reservation should be subject to use and occupancy tax, right? And as the broker for the owner, DVC is the one responsible for paying the tax. DVC acts as the owner's broker because they "manage" the reservation for the owner. I cannot make a reservation without DVC Member Services, and they broker the reservation regardless of whether it is for me or a guest. And as the broker they are responsible for determining who must pay the tax, how much they must pay, and for remitting the collected taxes.

I understand that if I collected money for renting that those funds are subject to use and occupancy tax, and since DVC was not involved in the financial transaction they would not be responsible for remitting those collected taxes. But as stated above, just because money does or does not change hands should not change or eleviate DVC's obligation to charge use and occupancy tax whenever a reservation is made where the owner is not in the room.

Blahnde

You may need to contact the state of FL for clarification, since it is their law that controls this.

You seem to have a very different definition for "renter" than I do (or the state of FL). My simplified definition of renter is that a party who pays for the accommodation is a renter and those who are not paying any money for the stay are either members or guests of the member. When DVC charges a member to stay on a cash basis they are responsible to collect and transmit the taxes to the state. If an owner is the one charging someone for a stay, then that owner has the responsibility to charge, collect and transmit the funds to the state. The definition is simply dependent on whether payment was received for the reservation. The State's definition is far more complex and does have the exclusions noted above.

DVC is NOT the broker for the owner. They do not collect any funds - the owner does (unless the owner has used an outside broker to handle the rental). The entitiy who collects the rent has the responsibility to remit the taxes to the state. The use tax is based on the amount charged for the room. When MS makes a reservation for the member, there is no use tax since points (with no cash value) were used to make the reservation. When a member charges someone for that same room, the member becomes the "landlord" and is responsible for the taxes owed.

If you really want the definitive answer, the FL state Department of Revenue would be the place to ask.

 

[JimMIA]

Why is the tax only applicable when an owner receives payment? Blahnde

Sales tax is not collected by DVC on points stays because DVC is not selling anything. The owner is using points we already own; no sale takes place. Whether we rent them out, give them away, or use them ourselves doesn't matter as far as DVC is concerned. They are our points. DVC doesn't sell us anything except the underlying contract...and not even that if we buy resale.

If we turn around and rent a reservation, that's a different situation. We are selling something, and we should collect and remit the appropriate taxes to the state and county.

 

[TisBit]

Why is the tax only applicable when an owner receives payment? Isn't the tax applicable if anyone other than the owner stays on the room, regardless of payment? As an owner, I cannot be renter ... it is not possible. But anyone else is, by definition, a renter whether money changes hands or not. They do not own and yet they use and occupy the room ... they should be subject to use and occupancy tax. Only owners (and leaseholders over 6 months) are not subject to these taxes, right? That means everyone else is. And just because my Aunt Sally did not pay me for the room, doesn't mean that the room doesn't have value or that she did not receive a benefit, right? So she owes use and occupancy tax.


Blahnde

You have to remember it is a 12.5% of the rate....so if there is no charge for the room, it is 12.5% of nothing, which equals nothing. If money changes hands for the room, then there is something to tax. It would probably be different if there was a $10 a night occupancy tax, but that isn't the case.

Enforcement would be very difficult, to prove that money actually exchanged hands, just as it would be difficult for CA to prove you sold your T-shirt for a profit. Just like the discussions about Disney enforcement of rules being difficult, it would be quite difficult for FL to research and prove something was rented (as in money exchanged hands) or gifted/given (no money exhcanged hands).

As for Disney being the broker, that is not exactly correct. A broker does more than schedule a reservation, but rather manage the whole transaction....they receive the payment, consult with the rentee, pay the renter and receive a profit from the transaction. In that case, yes the broker would determine all the taxes, etc and ensure they are paid, but that is not what Disney MS does....and they have made it clear they do not want to do it!

 

[DVC Mike]

Enforcement would be very difficult, to prove that money actually exchanged hands, just as it would be difficult for CA to prove you sold your T-shirt for a profit. Just like the discussions about Disney enforcement of rules being difficult, it would be quite difficult for FL to research and prove something was rented (as in money exchanged hands) or gifted/given (no money exhcanged hands).

Ahh, but this is not a discussion of whether or not people can shirk their responsibility to pay taxes or not. We are not having a discussion on ethics. This is a discussion of whether or not the law requires us to pay the tax.

It's been a good discussion so far. Based upon what's been said so far, folks who argue that we don't have to pay the 12.5% tax when we rent don't have much to stand on. Of course, a statement from the State of Florida or Orange County is needed to definitively answer this.