We did NOT do it! DVC here we come (soon), ROFR'D

[lisaviolet]

Lisa- The tax is paid on all US property sold by a seller living outside the US. When that US property is sold to ANYONE the tax is owed by the seller to the United States IRS.

That's the law! We all probably hear stories of where so & so sold to his neighbor and didn't pay it. If that is the case, THEY BROKE THE LAW!!

The repurcussions can be that the IRS, when they find out about so & so not paying it, will go after the seller for the money. Just try to get a seller to come up with money they've already spent, or one that has moved to another country and can't be found!! The one thing that stays the same is the property itself, it's NOT going anywhere. If they cannot get the money from the seller they could I suppose come after the purchaser. They can put a lien on the property itself. Now the new purchaser doesn't want to pay it either so if he ever wants to sell, guess what, he must pay off the lien in order to pass a clear title and he will also owe his own 10% if he is not a US citizen, or risk doing the same thing to another buyer.

It's a real bag of worms but the nice thing about the DVC property is that in most cases it has gone up in value, so even after paying 10% they are usually ahead of the game.

I have instructed the TTS staff to inform a foreign seller upfront about this tax BEFORE he lists his property. Otherwise it can be a very unpleasant surprise for the seller! In some cases, deals, time and money are lost because of it.

When Disney ROFR's a sale and therefore does the closing, they also will take the tax out of the foreign sellers proceeds, because it is the law.

Keep in mind, I am NOT a lawyer and don't profess to know everything there is to know about this situation. I am only sharing with you what I have learned over the years and believe to be true.

Best wishes,
Tom

Thanks Tom and thanks to the poster that brought up this tax. I had no idea. It impacts some of my decisions. Thank you so much for taking the time to post all of this information. It certainly isn't your responsibilty to educate me on American property taxation for foreign sellers. But thanks.

Lisa

 

[lisaviolet]

And I would suggest that all Canadian prospective DVC buyers take this into consideration. You never know. Not in regards of whether to buy or not. I love my DVC. But what to buy. Maximum size of contract. And where. No one has a crystal ball but some thought about buying multiple smaller contracts might help against this tax having such an impact in a future need to sell and change your contracts. I can't give my personal example. It's against board rules to list contracts/buying/selling plans. I've changed my outlook on my DVC holdings....what I want the size of each contract to be, how many, where, buying new properties.... this really puts a wrench in my long term DVC plans.

So once again thanks for the pertinent information. I love the disboards.