# Interest expense on DVC loan deductible?



## pefs65

I have a loan that I am paying off through DVC.
I know I should have bought resale  but it was my first TS purchase and I know better now thanks to TUG 

Anyway does anymone know if the interest on this loan through DVC is Tax deductible?

Thanks


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## Carl D

Yes, in most cases it can be considered your second home and therefor tax deductible.

Don't beat yourself up about buying DVC through Disney vs resale. Depending on which resort you bought, you may have saved very little if anything by purchasing resale. Some resorts would have saved more.


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## Carl D

I see you purchased at BLT. You did just fine purchasing through Disney if that's the resort you want to stay at most often.


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## pefs65

Thanks CarlD

We loved BLT for its closeness to the MK   for our three little ones 7,5,1  and the monorail

cant wait for our first visit home this November 

Thanks for your words of encouragement.

Thanks also for answering my question


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## jarta

"Anyway does anymone know if the interest on this loan through DVC is Tax deductible?

As Meryl Streep recently says:  "It's Complicated."

Here's what the IRS says:

http://www.irs.gov/publications/p936/ar02.html

Both Part I and Part II should be consulted.  Hopefully you can decipher the whether and the how much in time to file.  Good luck!   ...   eom


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## Carl D

Stand by..


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## DeniseM

Income Tax and Timeshares - written by a CPA/Tugger


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## Carl D

DeniseM said:


> Income Tax and Timeshares - written by a CPA/Tugger


I don't have time at the moment to read all of these articles, but please remember that when financing through Disney the loan is a mortgage, and you will receive a 1098 Mortgage Interest Statement.
I have talked with two accountants, and at least in my particular case it was deductible.


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## DeniseM

Let me help you out - it's just one article:



> Deductible Items (e.g., Taxes and Interest)
> Unless you rent your timeshare to others, you might have no deductible amounts related to the timeshare.
> 
> However, if the property taxes applicable to your unit are billed separately to you (such as in California), those are deductible. They should also be deductible if your resort shows them as a separate item on your maintenance fee billing. However, if you have to seek out the tax amount applicable to your unit by examining the financial statements, the taxes are not deductible.
> 
> A few owners can deduct the interest expense on a timeshare loan. The interest is deductible only if the loan is secured by the timeshare as a mortgage and you deduct no other mortgage interest except on your primary home. Note that most timeshare loans don't qualify because they are written as consumer loans rather than as mortgages. Similarly, interest expense on credit card debt used to finance the purchase would not be deductible.
> 
> If your timeshare was financed with a home equity loan on your personal residence or by refinancing your mortgage on that residence, the interest is generally deductible, subject to certain limitations.
> 
> Can you deduct interest on loans for more than one timeshare? If you have a mortgage on your primary residence, interest paid on loans on multiple timeshare properties would not be deductible, since interest in connection with only one property other than the primary residence can be deducted. But suppose the multiple timeshares are all at one resort. You might reasonably view these multiple timeshares as one "residence". The tax rules aren’t clear on this issue.
> 
> Forget about trying to use your timeshare in your business to get depreciation, MFs and other deductions. There is a rule in the tax law that prohibits any business deduction pertaining to an "entertainment facility". Timeshares fit into that category. There are a very few narrow exceptions to this rule.
> 
> Your annual maintenance fee is not deductible. This annual fee for utilities, pool care, lawn care, other maintenance, management, and other expenses can be compared to similar expenditures that you might incur on your primary residence, which are also not deductible.


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## Carl D

DeniseM said:


> Let me help you out - it's just one article:


Thanks.. It looks like DVC, in most cases, is tax deductible.


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## timeos2

*It might be but it might not*



pefs65 said:


> I have a loan that I am paying off through DVC.
> I know I should have bought resale  but it was my first TS purchase and I know better now thanks to TUG
> 
> Anyway does anymone know if the interest on this loan through DVC is Tax deductible?
> 
> Thanks



If it is a mortgage it is deductible and they should send you an annual statement of interest paid. If it was a personal loan, as most timeshare loans actually are, then it is not deductible. 

Since Disney does sell anything but RTU it would be a surprise (to me at least) if they actually issue a true mortgage based loan. But I have no knowledge of how they do it so I'd look for that annual statement and into any paperwork as to what exactly the loan is.


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## Carl D

timeos2 said:


> Since Disney does sell anything but RTU it would be a surprise (to me at least) if they actually issue a true mortgage based loan.


Yup, it's a true mortgage. 1098 mortgage interest statement and all.


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## bnoble

> Since Disney does sell anything but RTU it would be a surprise (to me at least) if they actually issue a true mortgage based loan.


Recall that the Mouse has clever lawyers---and if there is a way to get the government to line the Mouse's pockets, Mickey's lawyers will find it.  I'm not surprised in the least.


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## Carl D

bnoble said:


> Recall that the Mouse has clever lawyers---and if there is a way to get the government to line the Mouse's pockets, Mickey's lawyers will find it.  I'm not surprised in the least.


And this is a bad thing????
More money for the people, and less money for the government..
Sounds like a win-win to me!

Not sure how "The Mouse" gets more money, but regardless, if they are that's better than the government getting it.


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## bnoble

> Not sure how "The Mouse" gets more money


This is pretty basic microecon, Carl.  Giving a write-off for interest expense is, from the consumers' point of view, equivalent to reducing the interest rate.  The lower overall cost allows more people to afford it, increasing the market.  This allows Mickey to sell more timeshares at a higher price, thanks to that ol' supply and demand thing.  Writing the loans as mortgages makes Mickey more money in the end because, in effect, the government is subsidizing the timeshare loan.

I don't have a strong opinion about whether its a good thing or a bad thing---though there is some pretty good evidence that the mortgage deduction doesn't increase home ownership so much as raise real estate prices.  But, it's indisputable that this is how it works.  That Mouse sure is smart.


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## Carl D

bnoble said:


> This is pretty basic microecon, Carl.  Giving a write-off for interest expense is, from the consumers' point of view, equivalent to reducing the interest rate.  The lower overall cost allows more people to afford it, increasing the market.  This allows Mickey to sell more timeshares at a higher price, thanks to that ol' supply and demand thing.  Writing the loans as mortgages makes Mickey more money in the end because, in effect, the government is subsidizing the timeshare loan.
> 
> I don't have a strong opinion about whether its a good thing or a bad thing---though there is some pretty good evidence that the mortgage deduction doesn't increase home ownership so much as raise real estate prices.  But, it's indisputable that this is how it works.  That Mouse sure is smart.


If that's the case, Disney doesn't emphasize this as a selling point. They may point out that the interest might be deductible, but they certainly don't suggest that you should roll your savings into a larger membership. I suppose some people may figure that out on their own.


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