Disney Financing

[Balou3]

The loan that you get from Disney for DVC (WLV) --- can you deduct the interest on it since you are purchasing a real estate interest?????
Is it a secured or unsecured loan???

 

[DVCDAVE]

First it is a secured loan, secured by the underlying interst in DVC that you are buying. Second, if you do itemize your deductions on your 1040 form, you may be able to deduct it as a 2nd home. You are allowed to deduct interest on your first and second home, providing the loan value (combined) does not exceed $1,000,000. Further, you are allowed to deduct the interest in a home equity loan on your first home (2nd mortgage) up to $100,000.

Hope this helps,

--Dave

 

[mouseclick1]

This may sound like a stupid question, but...If we were to do an add-on at a different resort, would that still be deductible? Would both DVC resorts be rolled into one DVC purchase and be considered the second home, or would the add-on be considered a third home, and not be deductible?

 

[DVCDAVE]

I am not a tax advisor, but when I did my 'add on' through Disney this past March, I noticed something intersting. An 'add on' is additional points with the same use year added to an existing contract. The add on is given a suffix of .00X to your first contract, which carries a suffix of .000. (X, being 1, 2, or 3 etc. depending on how many add on one does). Now, when Disney does the direct debit they simply debit all your loans either on the first or fifteenth of any given month. all at once. Dues too, are combined, and debited as a second transaction. Naturally, an additonal purchase done through resale doesn't work this way at all. In fact, a purcahse done through resale is NOT an 'add on' in Disney's eyes at all. In conclusion, I fully expect to get one 1099 interest expense statement at the end of the year for both of my holdings from DVC.

I can only conclude that Disney will report one combined interest expense to the IRS, hence there would be no way for the IRS to know, or break out the two properties.

 

[mouseclick1]

Thanks, Dave!