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DVC Rental Question

hcarman

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We are owners at DVC. Last year for the first time we rented our points through Disney Vacation rental company. It was easy - all we had to do was make the booking and add the names to the reservation. The company dealt with payment. However, we received a tax statement. We have never claimed a rental before on our taxes as we don't generally rent. And when we do the price usually just covers the maintenance fees, if that- so not making profit. We use Turbo Tax and in the section on rentals it asks about how many weeks a year you rent, what percentage of the year it is rented, etc. This clearly doesn't apply to a small points rental which wasn't even a week long. Any ideas on how to handle? We are talking an amount less than 2000 for the two rentals.
 

rickandcindy23

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You have to claim your net profit.
 

hcarman

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You have to claim your net profit.
Thanks and that is what I figured but not sure how you answer questions about how many weeks a year you rent unit. It just doesn’t fit well with a points based program where you own less than a week to begin with.
 

Dean

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We are owners at DVC. Last year for the first time we rented our points through Disney Vacation rental company. It was easy - all we had to do was make the booking and add the names to the reservation. The company dealt with payment. However, we received a tax statement. We have never claimed a rental before on our taxes as we don't generally rent. And when we do the price usually just covers the maintenance fees, if that- so not making profit. We use Turbo Tax and in the section on rentals it asks about how many weeks a year you rent, what percentage of the year it is rented, etc. This clearly doesn't apply to a small points rental which wasn't even a week long. Any ideas on how to handle? We are talking an amount less than 2000 for the two rentals.
It's pulling from the Condo rental rules which don't apply in this situation. I suspect if you put in 2 weeks or less it won't even ask for the applicable numbers at all.
 

hcarman

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It's pulling from the Condo rental rules which don't apply in this situation. I suspect if you put in 2 weeks or less it won't even ask for the applicable numbers at all.
Thanks. We will give that a try. I know once before we rented a unit through Vacation Candy and they said they didn’t even report unless you made more than a certain amount - which we didn’t.
 

Dean

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Thanks. We will give that a try. I know once before we rented a unit through Vacation Candy and they said they didn’t even report unless you made more than a certain amount - which we didn’t.
Just because one doesn't get a 1099 doesn't mean the profit is not reportable but the risk of not doing so would be very low in that situation. I played with Turbotax and I'm not sure that I can get it to do the calculations correctly. You'll likely need to enter them manually. Your profit would be your rental price minus the applicable maintenance fees, and any direct expenses like advertising. Timeshares don't qualify for depreciation or carryover loss unless it's truly ran as a business with volume. And since everyone I know of limits that situation, it's not really possible to do so. Here's an article from the advice articles that's more specific and detailed https://tug2.net/timeshare_advice/income_taxes_and_timeshares_from_an_accountant.html
 

hcarman

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Just because one doesn't get a 1099 doesn't mean the profit is not reportable but the risk of not doing so would be very low in that situation. I played with Turbotax and I'm not sure that I can get it to do the calculations correctly. You'll likely need to enter them manually. Your profit would be your rental price minus the applicable maintenance fees, and any direct expenses like advertising. Timeshares don't qualify for depreciation or carryover loss unless it's truly ran as a business with volume. And since everyone I know of limits that situation, it's not really possible to do so. Here's an article from the advice articles that's more specific and detailed https://tug2.net/timeshare_advice/income_taxes_and_timeshares_from_an_accountant.html
Thanks so much for the article. Pretty complex. And the depreciation thing is a bit over my head. I would say by the time maintenance fees were factored in we made very little to no profit of course. Really don’t want to have to pay a tax advisor to figure out exactly how to report but will pass this info on to my husband. This will make me think twice about ever using this company as it seems like a hassle when we aren’t gaining profit here and certainly not running a business. Interesting part of article is you have to claim capital gains if you sell for more - but you can’t claim a loss if you sell for less. My guess is most of the owners sell for way less.
 

Dean

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It's not so much the company, in the US they are legally required to send you a 1099 if the amount exceeds a certain threshold. Regardless you are required to report it even without a 1099. If you don't have a 1099 and there is no profit you could just ignore it. It is unlikely with DVC you wouldn't have a profit unless you rent just for the maintenances fees like to family. $6 in fees and a rental of $16 PP would give you a profit of $10 PP. You can only count the fees on the points rented, not all of them. As I noted above it pulls from the Condo/vacation home rules where you can't claim a loss but have to pay on the income yearly. The difference there is that you can depreciate it and carry over losses to use against future profits and once you do sell you can capture any built in losses in the year of sale but would have to pay capital gains on any profit. As I noted, the 15 day free rentals on a condo do not apply to timeshares from a practical standpoint even though you could construct a situation where it might.
 
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