Purchase DVC...for future investment OR Identified specific QTY which reduces Financial impact

HallDisney2019

Earning My Ears
Joined
May 30, 2019
The title may not make sense; but here is what I am trying to accomplish:

1. Has anyone purchased a DVC membership (direct or resale) with the goal of not utilizing it until the purchase amount or monthly payment has been paid off (obviously still have MF). How was that experience? Was your initial calculation of pay-off close? Pros & cons to this approach

OR

2. Have you calculated the # of points needed to be able to sell XXX amount of points to pay for your down payment or financial monthly dues; but still have enough points left over to go on (1) trip a year (i.e. purchased 300 points @ $90/pp; financed monthly pmt around $400. Which means I can sell 240 points to get as much $$$ as I can yearly but still have a studio for 4-5 days each year). In this case, if I was able to move 240 points at $17/pp I would recoup roughly $4,100. My total yearly cost for my financial impact would be roughly $700 (not including MF)

I hope that make sense. Trying to generate Pro's & Cons of thinking this way

Thanks
 
Timeshare are not investments. I wouldn't count on it. Although I am basically doing that, I would only do that if you know 100% you can pay the MF dues each year without difficulty, meaning you aren't dependent on the actual rental to make payments. I plan to use my DVC whenever, but on the times I am not using (which is probably more often than I want since I own so many timeshare weeks that I can't use them all), I plan on renting since DVC is the easiest to rent. I figured about 10-15 years of renting would cover initial purchase price, which for an investment, isn't actually that good. I brought because I really wanted DVC, always dreamed of it, but cost wise financially, it doesn't make as much sense to me as my other timeshare weeks. But it's the only one of my timeshare that I feel pretty good about renting out if I need to.

Having said that, what worries me is you are talking about monthly payments. I would only feel comfortable if I pay off the initial purchase price in full, but that's me, everybody have their own risk tolerance level. Personally, I don't think it's a good idea if you have to finance the purchase.

Good luck with your purchase decision.

Great3
 
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I would think of it this way. The prime value of DVC is vacations at Disney World. If you rent out your points you do not get the prime value.
The rental proceeds is less than the value if you use it yourself. This is because of the Maintenance Fees and because it has to be a good deal for the renter as well, so you are "giving" the renter some of your value. So, while it may be appealing to buy and rent out for a while, you are really just borrowing money to subsidize someone else's vacations.
If DVC makes sense for you, save the money and pay cash. Then use it yourself.
 
Doing some basic arithmetic (not factoring Time Value of Money), it seems like it would take quite a while to break even doing that.

Example) Saratoga = $110 per point, Maintenance Fee = 6.40 Per Point. Lets assume you buy 100 points and rent out at $15 per point.

15 - 6.40 = 8.60
8.60 x 100 = 860
110 x 100 = 11,000

11,000 / 860 = 12.8 before you can even utilize your purchase.
 


Doing some basic arithmetic (not factoring Time Value of Money), it seems like it would take quite a while to break even doing that.

Example) Saratoga = $110 per point, Maintenance Fee = 6.40 Per Point. Lets assume you buy 100 points and rent out at $15 per point.

15 - 6.40 = 8.60
8.60 x 100 = 860
110 x 100 = 11,000

11,000 / 860 = 12.8 before you can even utilize your purchase.
You also pay tax on the rental income. The buy-in cost is not deductible.
 
Doing some basic arithmetic (not factoring Time Value of Money), it seems like it would take quite a while to break even doing that.

Example) Saratoga = $110 per point, Maintenance Fee = 6.40 Per Point. Lets assume you buy 100 points and rent out at $15 per point.

15 - 6.40 = 8.60
8.60 x 100 = 860
110 x 100 = 11,000

11,000 / 860 = 12.8 before you can even utilize your purchase.
You also pay tax on the rental income. The buy-in cost is not deductible.
Plus he is financing, so would take even longer.
 
Doing some basic arithmetic (not factoring Time Value of Money), it seems like it would take quite a while to break even doing that.

Example) Saratoga = $110 per point, Maintenance Fee = 6.40 Per Point. Lets assume you buy 100 points and rent out at $15 per point.

15 - 6.40 = 8.60
8.60 x 100 = 860
110 x 100 = 11,000

11,000 / 860 = 12.8 before you can even utilize your purchase.

Not only that, by the time you break even, some of the DVC Home Resort contracts won't have many RTU years left for you to actually enjoy. That's the flaw of thinking of trying to re-coup your initial purchase price.

Great3
 


You also pay tax on the rental income. The buy-in cost is not deductible.
I'm not an expert on US tax law, but I'd presume this would be considered a rental property which means you can deduct depreciation. Between interesr, depreciation, and maintenance fees, i dont think there'd be significant taxes
 
I'm not an expert on US tax law, but I'd presume this would be considered a rental property which means you can deduct depreciation. Between interesr, depreciation, and maintenance fees, i dont think there'd be significant taxes
Here is a good thread on this topic or income tax on timeshares. I do believe you can deduct the interest and maintenance fees however I'm not sure about depreciating the asset.

https://www.disboards.com/threads/do-i-pay-taxes-on-points-rented.3734879/page-2#post-60303790
 
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Timeshares are treated differently and I think it is very rare that you can depreciate anything. Though you can deduct the operational cost component (not property tax though not sure on capital) of the dues. As for interest deductions I think some weird rules apply to a timeshare too (though if owned for distinctly investment income not sure).

Here is a good thread on this topic

https://www.disboards.com/threads/do-i-pay-taxes-on-points-rented.3734879/page-2#post-60303790

From everything I have read, the rule you are referring to is the determiniation of the rental is considered a "vacation rental". If you rent it out less than 15 days in a year AND you use it personally for 15 daysbor more in the year, then you do not have to claim the rental income.

In this circumstance, it would not be considered a vacation home so you must claim the income, but you should still be allowed to deduct all expenses. You are essentially running a for-profit business
 
From everything I have read, the rule you are referring to is the determiniation of the rental is considered a "vacation rental". If you rent it out less than 15 days in a year AND you use it personally for 15 daysbor more in the year, then you do not have to claim the rental income.

In this circumstance, it would not be considered a vacation home so you must claim the income, but you should still be allowed to deduct all expenses. You are essentially running a for-profit business
Ah true as long as it is purely used for rental business then all should be deductible.
 
I'd wait. Put money aside each month into an interest bearing account and then buy when you have the money you need. Interest rates on financing are super high.
 
But it is against your Disney contract to use it purely for rental business, so that's an issue right there.
That’s very true. I don’t disagree with that’s component. I was merely saying you can depreciate completely only if never used personally. But as you pointed out if you use it purely as a rental DVC can reasonably assume it constitutes a commercial activity which is prohibited, agreed.
 
That’s very true. I don’t disagree with that’s component. I was merely saying you can depreciate completely only if never used personally. But as you pointed out if you use it purely as a rental DVC can reasonably assume it constitutes a commercial activity which is prohibited, agreed.
Also, since DVC has this contract component universally it may be an audit flag.
 
Did not say they were. But I suspect timeshare rental income is a lot like home office deductions - flags review, and familiarity ensues.

If you are getting money through paypal its unlikely anyone would ever notice. Paypal doesnt even report anything to the IRS until your income surpasses $20k.

People should be reporting it but I bet there are a bunch of people bypassing those taxes. Same with people who run yard sales, sell tickets, or other stuff.
 
From everything I have read, the rule you are referring to is the determiniation of the rental is considered a "vacation rental". If you rent it out less than 15 days in a year AND you use it personally for 15 daysbor more in the year, then you do not have to claim the rental income.

In this circumstance, it would not be considered a vacation home so you must claim the income, but you should still be allowed to deduct all expenses. You are essentially running a for-profit business
This does not apply to time shares.
 

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