Capital Gains Tax on DVC Resale

[HyperspaceMountainPilot]

I am wondering if anybody who has sold one of their DVC contracts lately knows if there are any major differences between DVC capital gains and a house sale. In particular I am wondering if we can deduct the following from our capital gains:
(1) closing costs paid when buying the contract
(2) annual dues during life of contract (or anything else I'm not thinking of)
(3) broker fees paid to sell the contract

Thanks!

 

[JackosinDIS]

Not a tax expert, but I believe you can deduct the costs of purchase and resale (I.e closing costs and broker fees). You cannot deduct the dues paid over the life of the contract.

 

[DaveNan]

Again, not a tax expert, but if you look at the dues each year a portion goes into capital improvements. Ask a tax expert, but you may be able to add that portion (only) to the basis of the property.

 

[HyperspaceMountainPilot]

Again, not a tax expert, but if you look at the dues each year a portion goes into capital improvements. Ask a tax expert, but you may be able to add that portion (only) to the basis of the property.

Thanks, I'm not looking to do anything too fancy, just trying to figure out if I can get close to zero with closing costs, maybe dues that got rolled into closing costs at time of purchase, and broker costs on the way out. I haven't owned long enough for a fraction of the annual dues to be that meaningful in the aggregate.

 

[DaveNan]

Thanks, I'm not looking to do anything too fancy, just trying to figure out if I can get close to zero with closing costs, maybe dues that got rolled into closing costs at time of purchase, and broker costs on the way out. I haven't owned long enough for a fraction of the annual dues to be that meaningful in the aggregate.

It is the line called "reserves" on the dues statement. I own at 3 resorts. It ranged from $1.30 to $1.40 per point last year. If you have owned for 3 years that's $4 per point of increased basis. It might be more than you think.

 

[Jgc014]

You can add closing cost to your basis. You can deduct broker commission from your proceeds. You cannot add all dues to basis, but anything for the improvement of the property should be able to be added to your basis.

 

[AstroBlasters]

https://finnlawgroup.com/can-i-writ...hat timeshare owners,, are not tax-deductible.

 

[AstroBlasters]

https://www.redweek.com/resources/articles/timeshare-tax-deductions

“Closing costs on your timeshare purchase are generally not deductible. Those expenditures, along with any related legal expenses and other costs incurred to purchase your week, should be added to the purchase price to determine the total cost of your week for tax purposes. (More about that in a future article.)”

 

[HyperspaceMountainPilot]

https://www.redweek.com/resources/articles/timeshare-tax-deductions

“Closing costs on your timeshare purchase are generally not deductible. Those expenditures, along with any related legal expenses and other costs incurred to purchase your week, should be added to the purchase price to determine the total cost of your week for tax purposes. (More about that in a future article.)”

Thank you, it looks like closing costs go into the basis. The 4th section on Redweek is helpful, if depressing—basically you pay taxes if your membership increases in value but you can’t take a loss if it decreases in value…so I guess I’m rooting to break exactly even.

 

[AnnaKristoff2013]

Thank you, it looks like closing costs go into the basis. The 4th section on Redweek is helpful, if depressing—basically you pay taxes if your membership increases in value but you can’t take a loss if it decreases in value…so I guess I’m rooting to break exactly even.

Yeah, it’s this. You can’t take a capital loss on a timeshare sale (there are some hyper specific exemptions dealing with the situation where you are basically a commercial rental broker and using it for business) but you can offset your capital gain.

 

[Dyefrog]

Does anyone else find it interesting discussing capital gains on a timeshare? What other timeshare has ever had this problem? DVC for the win.

 

[CarolynFH]

Thank you, it looks like closing costs go into the basis. The 4th section on Redweek is helpful, if depressing—basically you pay taxes if your membership increases in value but you can’t take a loss if it decreases in value…so I guess I’m rooting to break exactly even.

Keep in mind that AFAIAA the IRS doesn’t recognize inflation when calculating capital gains. That’s why I’m glad we’re not trying to sell our BWV that we paid $62 pp for in 1997. That’s roughly $118 pp now, but if we sold for that we’d be on the hook for the $56 pp “profit.” The penalty for holding on for all these years!