Two somewhat related questions: Taxes and current PPP

[kkmauch]

Question 1: If we sell our OKW contract (310) points but clearly take a loss on it, what are the tax implications? If by some miracle we actually make money on the contract, how do we figure the federal income taxes on the gain?

Question 2: What are the current PPP at AKV and BLT? We want AKV, just not sure of inventory. Is Disney still selling SSR? What's the PPP there?

Thanks so much! We want to sell OKW and buy a new contract with a longer life that can be passed on and at a place that we prefer to stay. LOVE okw and are staying there one last time on our points in november and then considering a sale and buying new from Disney for the incentives (if there are any). We also need fewer points now.

Thanks!

 

[disneydenisel]

Question 1: If we sell our OKW contract (310) points but clearly take a loss on it, what are the tax implications? If by some miracle we actually make money on the contract, how do we figure the federal income taxes on the gain?

It's best to ask your accountant about the tax question, but I can tell you what I think is correct. I am pretty sure that you cannot deduct a loss on a timeshare, so if you lose money, you are not allowed to write anything off. If you make money, then you are supposed to declare that as income. So for example, if you make $1000, then you would have $1000 in income for 2011, or whatever year you sell it in. I sold a timeshare in 2009 for what I paid for it in 2006, so it was a break even and I had to put it down somewhere on my taxes as a net gain of 0.

Good luck with your sale!

 

[ORD2KOA]

Question 1: If we sell our OKW contract (310) points but clearly take a loss on it, what are the tax implications? If by some miracle we actually make money on the contract, how do we figure the federal income taxes on the gain?
Thanks!

I believe the only way you would be able to deduct a loss on a timeshare unit is if you purchased it to use strictly as a rental property. Odds are that isn't the case, so no deduction if you sell at a loss. You will report the sale on your income tax forms next year, and if you do profit, you'll be taxed.

 

[thepops]

If you have a potential loss (only you can figure that out from your purchase price and the going rate on resales) why not compare that to the cost of extending your OKW points to the later date that was offered? If you figure the loss and what you'd pay above that for AKV or SSR it might be cheaper to stay with OKW adn extend (at a resort you already love)

 

[drusba]

My understanding is that the timeshare is an asset for personal use (like your car) and not an investment (like a stock) meaning any gain has to be reported as a capital gain, to which separate tax rates apply, but you do not get to deduct any loss.

dvcnews.com lists and updates Disney prices for DVC. The Timeshare Store, with tabs for clicking at the top of this page, gives resale prices for AKV and BLT

If selling only because of contract's length of time, then you might want to check with Disney because I believe you can still purchase the 15 year extension for OKW from 2042 to 2057.

 

[Dean]

Other than if one bought DVC and truly treated it as ONLY a rental property, like a condo, could there be any potential for depreciation, etc. In the absense of such a situation, one could not deduct any loss but would be liable for any gains.

 

[saintstickets]

Vacation homes, condos and timeshares are considered personal property and a loss from a sale is not deductible. Only if the property was purchased (or converted) for rental use can a loss be considered and then there are other rules...especially if you use it for your personal use at any time. Then, if you rent your points, the income from the rental could be taxable as well. Take this advice with a grain of salt. I'm not a CPA and I did not sleep at a Holiday Inn Express last night either.

 

[crisi]

I'm not a CPA either, but I think Bill has it right.

The other thing is that while the IRS doesn't disclose audit flags, many people believe that - even if you are on the up and up about deducting timeshare expenses or losses because you DID treat it as a business - its an audit flag. Therefore, even if you did use your timeshare as a business, it MIGHT not be worth the deductions anyway, since it MIGHT increase your audit risk.