Wyndham eliminating mega-renters

[troy12n]

Actually, many HOA's only allow for a limited percentage of the neighborhood to be rented out. When we closed on our condo, we signed agreement with the bylaws that had such a restriction and we appreciate the reasons for it. Even if you don't have such restrictions on the use of your home, but you co-own your home with dozens, hundreds, even thousands of other owners, why would you be upset at being told you could not rent it out whenever and wherever you want? I'm okay to take one (inconvenience) for the team... and choose an unrestricted time to give to family, friends, or a renter.

My folks live in a condo whose HOA covenants explicitly forbid subletting/renting as well as short term rentals like AirBNB. My (deed restricted) community I live in only allows a certain percentage of (single family) homes to be rentals. And it's actively enforced.

 

[dgalati]

You have no evidence of this, yet continue to use this forum as your soapbox in your personal vendetta against Wyndham...

I see Wyndham cracking down on mega renters (the real ones) if it's even happening, as a net win for all owners.

I can't be sad for someone who bought a million points retail, then 80 million resale points for a couple grand giving their resale points back because they can no longer run their most likely completely illegitimate business... gaming the VIP system to the extreme. You know, the one they aren't paying taxes on and all that.

I actually feel bad for any owner that bought developer and was promised the ability to rent and pay all maintenance fees. But on the resale points being used with VIP benefits and discounts I do agree its a loophole that has been abused. This allows owners to run a rental business at the expense of owners looking to book for personal use. Here is another question for you to ponder Would it matter if they bought all their points from the developer? I wonder if Wyndham gives some consideration to owners that are renting commercially but bought 3-4 million points at developer pricing.

 

[55plus]

If Wyndham eliminates renting altogether some to most of the VIP owned resale points become useless to the those who rent on a large scale. To cut those maintenance fee costs they can apply for certified exit to cut those expenses. Win win for everyone.

 

[dgalati]

If Wyndham eliminates renting altogether some to most of the VIP owned resale point become useless to the those who rent on a large scale. To cut those maintenance fee costs they can apply for certified exit to cut those expenses. Win win for everyone.

l may also buy a few more points if owning becomes cheaper then renting. If people can no longer rent cheaper then paying maintenance fees it may create a whole new subset of buyers.
Let me clarify "BUY" All resale points at less then a $100. The $100 Purchase price would include transfer costs and resort transfer fee.

 

[HitchHiker71]

I think someone's wholly owned home or vacation home is different than fractional ownership. In this case Wyndham is the referee and it's their game, but the owners' own the court. I understand both sides of the issue.

IIRC fractional real estate ownership only applies to the more traditional weeks based timeshare ownerships. UDI is "right to use" and is not a fractional ownership system as a result. The "right to use" is largely defined by the club with respect to the exchange mechanisms, in our case CWP, and is subject to change over time at the sole discretion of Wyndham. Technically a CWS owner can be banned from the CWP club - meaning they cannot use CWP to exchange their UDI "right to use" CWS contract at any other Wyndham CWP location - but they can still use their CWS points at their home resort - and only at their home resort once divorced from CWP. Usually the impacted owner would choose to relinquish their CWS contract once this occurs of course, given their ability to vacation at other Wyndham resorts has been cut off. I'm not sure how a CWA owner would be impacted in this use case - given CWA contract owners don't have a single home resort.

 

[55plus]

IIRC fractional real estate ownership only applies to the more traditional weeks based timeshare ownerships. UDI is "right to use" and is not a fractional ownership system as a result. The "right to use" is largely defined by the club with respect to the exchange mechanisms, in our case CWP, and is subject to change over time at the sole discretion of Wyndham. Technically a CWS owner can be banned from the CWP club - meaning they cannot use CWP to exchange their UDI "right to use" CWS contract at any other Wyndham CWP location - but they can still use their CWS points at their home resort - and only at their home resort once divorced from CWP. Usually the impacted owner would choose to relinquish their CWS contract once this occurs of course, given their ability to vacation at other Wyndham resorts has been cut off. I'm not sure how a CWA owner would be impacted in this use case - given CWA contract owners don't have a single home resort.

If this were to become policy for owner who violate the rules, this alone would make an owner think about renting to others or becoming a renter in the future.

 

[joestein]

My previous executive Director (who just retired) owned like 8 rental properties, bragged about not paying taxes on any of his rental income, also was one of these people who voted exclusively for the candidate that promised to keep taxes low, cut programs, etc... on income he didn't even report. You know the type. Truth be known, he spent most of his time "at work" managing his properties and looking for new ones, but that's another story.

That makes no sense. If you own real estate and rent it out, you can deduct your expenses including interest and deprecation. Many renters can have a loss which will result in lower taxes. Why would someone not take advantage of that.

Plus, all the deposits into their accounts are records of the rents. If they are audited, the interest and penalties will bankrupt them. And they brag about this?

 

[Eric B]

Why would someone not take advantage of that.

Passive activity loss limitations.

 

[joestein]

Passive activity loss limitations.

It is still 25K if the person has under $100K in wages.

 

[dgalati]

That makes no sense. If you own real estate and rent it out, you can deduct your expenses including interest and deprecation. Many renters can have a loss which will result in lower taxes. Why would someone not take advantage of that.

Plus, all the deposits into their accounts are records of the rents. If they are audited, the interest and penalties will bankrupt them. And they brag about this?

You would think a executive director would have more smarts then that. Makes me wonder what kind of person would work for a boss like that?

 

[Eric B]

It is still 25K if the person has under $100K in wages.

Actually, it's for under $100K in modified adjusted gross income (MAGI), not just wages, and there's a phase out as MAGI rises. The tax rules and accounting get a bit complex, and can be more effort than it's worth for the tax savings that might be available. IMHO, it doesn't take a lot of examination to figure out that it might not really be worth someone's time to see if any tax savings are available if they're doing a minor amount of renting and not making a profit. Bottom line - you had asked why someone would not take advantage of the [the tax benefits]; that's the reason I don't.

IRS Publication 527 has some discussion on the impacts of a presumption of rental for profit and the ability to deduct expenses; if you aren't renting for profit, you can simplify meeting the filing requirements to the point that it's pretty trivial. If you're making profits from renting, there are more obligations of course, though many people historically underreport the income. I can only imagine what the paperwork involved in accounting and tax reporting for ~150 short-term rentals properly must be, not to mention the complexity of the regulations.

 

[troy12n]

It is still 25K if the person has under $100K in wages.

The person in question made well over 150k in salary. I also got the impression most of his transactions were cash... what he did with it is anyone's guess. Can't answer anything else

 

[HitchHiker71]

My previous executive Director (who just retired) owned like 8 rental properties, bragged about not paying taxes on any of his rental income, also was one of these people who voted exclusively for the candidate that promised to keep taxes low, cut programs, etc... on income he didn't even report. You know the type. Truth be known, he spent most of his time "at work" managing his properties and looking for new ones, but that's another story.

Not having been there to witness the conversation, I have no idea what your director did. But, given I own a few rental properties myself, it's not at all uncommon to run a loss on paper for each property - especially for the first several years if you're using accelerated depreciation schedules, along with deducting mortgage interest, insurance, property taxes, and any/all property maintenance expenses, including turnover expenses. One of my properties has been a rental since 2009 and I still had a net loss last year due to property turnover along with a few decent sized repair expenses. It doesn't make much given individual properties don't generate much income overall. The property I'm referring to only generates about 20k per year if it's rented for the entirety of the calendar year. If it's a turnover year - like this year - I usually lose about two months of net monthly rent - which drops it down to under 17k per year easily - couple that with all of the deductions - it's not hard to generate a net loss. My accelerated depreciation will stop in 2024 though - after which this property will start turning a consistent annual profit - which means it'll be time to perform a 1031 exchange.

 

[dgalati]

Not having been there to witness the conversation, I have no idea what your director did. But, given I own a few rental properties myself, it's not at all uncommon to run a loss on paper for each property - especially for the first several years if you're using accelerated depreciation schedules, along with deducting mortgage interest, insurance, property taxes, and any/all property maintenance expenses, including turnover expenses. One of my properties has been a rental since 2009 and I still had a net loss last year due to property turnover along with a few decent sized repair expenses. It doesn't make much given individual properties don't generate much income overall. The property I'm referring to only generates about 20k per year if it's rented for the entirety of the calendar year. If it's a turnover year - like this year - I usually lose about two months of net monthly rent - which drops it down to under 17k per year easily - couple that with all of the deductions - it's not hard to generate a net loss. My accelerated depreciation will stop in 2024 though - after which this property will start turning a consistent annual profit - which means it'll be time to perform a 1031 exchange.

The best part of owning rental property is the appreciation and principle reduction that the rent is covering. The last 4-6 years appreciation has been off the charts.

 

[troy12n]

You would think a executive director would have more smarts then that. Makes me wonder what kind of person would work for a boss like that?

The kind of person who values a stable, good, well paying job who can deal with an unscrupulous executive director who I didn't have to interface with much...

My immediate manager and co-workers are good, if I had to interface with this previous director more, it would be a different story. The guy who replaced him is just as much of a dingleberry, in different ways

 

[dgalati]

The kind of person who values a stable, good, well paying job who can deal with an unscrupulous executive director who I didn't have to interface with much...

My immediate manager and co-workers are good, if I had to interface with this previous director more, it would be a different story. The guy who replaced him is just as much of a dingleberry, in different ways

Define dingleberry? Are you refering to a fruit, a stupid inept person or what hangs from a dogs behind?

 

[Cyrus24]

which means it'll be time to perform a 1031 exchange.

Swap 'til you Drop. But, be ready, tax laws are about to see substantial change and 'loopholes' for real estate holdings (perceived to be held by the rich) will be high on the list for closure.

 

[joestein]

Not having been there to witness the conversation, I have no idea what your director did. But, given I own a few rental properties myself, it's not at all uncommon to run a loss on paper for each property - especially for the first several years if you're using accelerated depreciation schedules, along with deducting mortgage interest, insurance, property taxes, and any/all property maintenance expenses, including turnover expenses. One of my properties has been a rental since 2009 and I still had a net loss last year due to property turnover along with a few decent sized repair expenses. It doesn't make much given individual properties don't generate much income overall. The property I'm referring to only generates about 20k per year if it's rented for the entirety of the calendar year. If it's a turnover year - like this year - I usually lose about two months of net monthly rent - which drops it down to under 17k per year easily - couple that with all of the deductions - it's not hard to generate a net loss. My accelerated depreciation will stop in 2024 though - after which this property will start turning a consistent annual profit - which means it'll be time to perform a 1031 exchange.

If 1031 is still available. They are discussing eliminating it.

 

[joestein]

Swap 'til you Drop. But, be ready, tax laws are about to see substantial change and 'loopholes' for real estate holdings (perceived to be held by the rich) will be high on the list for closure.

They do benefit the rich in many cases. Most middleclass or poor people don't own rental properties. Some people do save and invest, but it primarily benefits the top.

 

[dgalati]

They do benefit the rich in many cases. Most middleclass or poor people don't own rental properties. Some people do save and invest, but it primarily benefits the top.

If you invest and stick your neck out on the line why shouldn't it benefit? Most rich people became rich investing in themselves and risking their life savings. Oh yeah and by the way they pay taxes on the gains to their silent partner Uncle Sam. Uncle Sam gives tax breaks and encourages investment knowing it helps create jobs and taxes are generated from it.

 

[troy12n]

If you invest and stick your neck out on the line why shouldn't it benefit? Most rich people became rich investing in themselves and risking their life savings. Oh yeah and by the way they pay taxes on the gains to their silent partner Uncle Sam. Uncle Sam gives tax breaks and encourages investment knowing it helps create jobs and taxes are generated from it.

Most people became rich by inheriting it, some of them actually stay rich by investing wisely and not blowing it. Some don't. Certainly some do get rich from hard work and risk, but those people are in the minority.

 

[dgalati]

Most people became rich by inheriting it, some of them actually stay rich by investing wisely and not blowing it. Some don't. Certainly some do get rich from hard work and risk, but those people are in the minority.

Well I guess I am in the minority. Hard work staying married and living within my means helped but luck also played a part in it. The harder I worked the luckier I got!

 

[dioxide45]

Most people became rich by inheriting it, some of them actually stay rich by investing wisely and not blowing it. Some don't. Certainly some do get rich from hard work and risk, but those people are in the minority.

You may want to do some simple searches on this to "fact check" your claims. A big percentage of the wealthiest people have self made wealth, not inherited wealth.

Nearly 68% of the world's richest people are 'self-made,' says new report

A new report from Wealth-X says only 8.5% of the world's ultra-high-net-worth population — individuals with $30 million or more in net worth — inherited their money.

www.cnbc.com

How Many Millionaires Actually Inherited Their Wealth?

Our research team here at Ramsey Solutions conducted the largest study ever done on millionaires, and we uncovered the truth about how these men and women built their wealth.

www.ramseysolutions.com

 

[dgalati]

You may want to do some simple searches on this to "fact check" your claims. A big percentage of the wealthiest people have self made wealth, not inherited wealth.

Nearly 68% of the world's richest people are 'self-made,' says new report

A new report from Wealth-X says only 8.5% of the world's ultra-high-net-worth population — individuals with $30 million or more in net worth — inherited their money.

www.cnbc.com

How Many Millionaires Actually Inherited Their Wealth?

Our research team here at Ramsey Solutions conducted the largest study ever done on millionaires, and we uncovered the truth about how these men and women built their wealth.

www.ramseysolutions.com

I think inheriting wealth is the plan for most of the millennials. A big majority don't want to work 40 hours a week let alone the 60-70 hour work weeks my parents worked and instilled in me.

 

[joestein]

If you invest and stick your neck out on the line why shouldn't it benefit? Most rich people became rich investing in themselves and risking their life savings. Oh yeah and by the way they pay taxes on the gains to their silent partner Uncle Sam. Uncle Sam gives tax breaks and encourages investment knowing it helps create jobs and taxes are generated from it.

Actually in this case we are talking about a 1031 exchange which is a deferral of taxes on capital gains associated with RE investments if you re-invest those gains into like kind RE.

You mentioned paying taxes on the gains to Uncle Sam, but deferral is exactly the opposite. No taxes are paid in this case, the gain reduces the basis of the exchange property.

Now think about this. A person buy a building for $25MM in the 80's. Today that building is worth $500MM with annual rents that probably exceed the purchase price. They can sell this building and invest in another building or a whole portfolio of buildings with the proceeds and not pay any capital gains tax. Then they die and their heirs get the properties at the stepped up basis. They estate still has to pay estate tax. However, investors of this size are savvy enough to set up other ways to mitigate the tax. (life insurance, debt provided by heirs, etc).

And since we are on the topic - I am a believer that capital gains should be taxed much higher and wage income lower. People live on wage, interest (or used to at one time) and dividend income. Not on capital gains.