How is the profit worked out when selling a DVC contract?

Br'er Bear · 27 Nov 21, 12:50 PM

We’ve always thought our DVC contracts would continue to be used by our family long after we’ve gone, and while we haven’t yet changed our thinking on that we thought now would be a good time to try and understand some of the implications of selling both now and after our family has takes over.

In the thread Selling up question, and the FIRPTA withheld, Dibber Love*my*hols states I don't think we'll receive it all back because we will be taxed on profit, so one question would be; how is the profit worked out?

Is it just the difference between the buying and selling price (less fees), we did quickly search the Dibb but couldn’t find an answer.

But we did find the following on a googled search and wondered if they’re applicable to DVC and if they would also apply to non-US residents.

Your timeshare can carry the same tax deductions as a house, as long as it's a deeded real estate interest.

This means that you may be able to write off your mortgage interest as well as the property taxes that you pay on your timeshare unit,

All capital improvements to your home are tax deductible.

You cannot claim the deduction until you sell it when the cost of additions and other improvements are added to the cost basis of your property.

The IRS defines a capital improvement as a home improvement that adds market value to the home, prolongs its useful life or adapts it to new uses.

Minor repairs and maintenance jobs like changing door locks, repairing a leak or fixing a broken window do not qualify as capital improvements.

Thus the profit doesn’t seem to just be the difference in the buying and selling price (less fees) but might also include the property tax and maybe even the capital reserves for each year you’ve paid the dues.

So can anyone please enlighten us on how their profit was worked out?

Also, if that does include the property tax, capital reserves or anything else since the contract was purchased, could those deductions be carried over to your next of kin when it’s transferred over to them and at the original purchase cost?

Many thanks.

Love*my*hols · 27 Nov 21, 01:30 PM

I don't actually know how the profit was calculated but didn't fancy arguing with IRS !

**marlouwrig** · 27 Nov 21, 01:36 PM

I believe the FIRPTA is charged on the total value of the sale proceeds regardless of whether any profit was made.

What I don't understand is how any profit made or dues paid affects the amount you are able to then claim back once the sale has gone though

YorkshireT · 27 Nov 21, 02:23 PM

I would just pay one of those people to sort it out which I assume Love Hols did?

You would have thought it is a good chunk of the dues (for the refurbs, serious maintenance etc) and property taxes. Gawd knows how they calculate that, or just use a standard calc?

Love*my*hols · 27 Nov 21, 02:24 PM

Originally Posted by YorkshireT

I would just pay one of those people to sort it out which I assume Love Hols did?

Yes I did and accepted what they told me .

YorkshireT · 27 Nov 21, 02:25 PM

Originally Posted by Love*my*hols

Yes I did and accepted what they told me .

And how much did you end up paying as a percentage of the sale and how much more did you sell for compared to what you bought at before taxes?

Love*my*hols · 27 Nov 21, 02:40 PM

Quick calculation
Cost in 2007 $5000 (£2500),50 PTS at BWV, so $100 a point
.
Contract ..sold at $150 a point, got $5175 (£3644) from resale company taking away fees etc +
Tax $665 (£450) paid out to me and
$460 to IRS
Total total $5840 (£4094)

YorkshireT · 27 Nov 21, 02:47 PM

Originally Posted by Love*my*hols

Quick calculation
Cost in 2007 $5000 (£2500),50 PTS at BWV, so $100 a point
.
Contract ..sold at $150 a point, got $5175 (£3644) from resale company taking away fees etc +
Tax $665 (£450) paid out to me and
$460 to IRS
Total total $5840 (£4094)

Wow that was quite a bit of 'skim' off the top, but at least you made a profit. Thanks for the info- interesting. I suspect the expert's fee is the same for the tax reclaim even on a small contract?

So it looks like you lose about 15%+ in taxes and fees.

Some of mine have doubled, and I am not planning on selling, but useful to know.

Love*my*hols · 27 Nov 21, 02:51 PM

Originally Posted by YorkshireT

Wow that was quite a bit of 'skim' off the top, but at least you made a profit. Thanks for the info- interesting. I suspect the expert's fee is the same for the tax reclaim even on a small contract?

So it looks like you lose about 15%+ in taxes and fees.

Some of mine have doubled, and I am not planning on selling, but useful to know.

Yes ,it was $450 to claim the tax back,so just about worth it .Sold a second contract shortly after and had to pay again .

27 Nov 21, 12:50 PM	#1
	27 Nov 21, 12:50 PM Br'er Bear Very Serious Dibber
Br'er Bear Very Serious Dibber Join Date: May 13	How is the profit worked out when selling a DVC contract? We’ve always thought our DVC contracts would continue to be used by our family long after we’ve gone, and while we haven’t yet changed our thinking on that we thought now would be a good time to try and understand some of the implications of selling both now and after our family has takes over. In the thread Selling up question, and the FIRPTA withheld, Dibber Lovemyhols states I don't think we'll receive it all back because we will be taxed on profit, so one question would be; how is the profit worked out? Is it just the difference between the buying and selling price (less fees), we did quickly search the Dibb but couldn’t find an answer. But we did find the following on a googled search and wondered if they’re applicable to DVC and if they would also apply to non-US residents. Your timeshare can carry the same tax deductions as a house, as long as it's a deeded real estate interest. This means that you may be able to write off your mortgage interest as well as the property taxes that you pay on your timeshare unit, All capital improvements to your home are tax deductible. You cannot claim the deduction until you sell it when the cost of additions and other improvements are added to the cost basis of your property. The IRS defines a capital improvement as a home improvement that adds market value to the home, prolongs its useful life or adapts it to new uses. Minor repairs and maintenance jobs like changing door locks, repairing a leak or fixing a broken window do not qualify as capital improvements. Thus the profit doesn’t seem to just be the difference in the buying and selling price (less fees) but might also include the property tax and maybe even the capital reserves for each year you’ve paid the dues. So can anyone please enlighten us on how their profit was worked out? Also, if that does include the property tax, capital reserves or anything else since the contract was purchased, could those deductions be carried over to your next of kin when it’s transferred over to them and at the original purchase cost? Many thanks. Edited at 03:22 PM.