Are you a proud owner of Disney Vacation Club (DVC)? If yes, then you must be wondering whether you can claim it on your taxes or not. The answer is yes, but with certain conditions.
Firstly, let’s understand what Disney Vacation Club is. It is a timeshare program that allows its members to own a piece of Disney real estate. Members can use their points to book stays at any of the Disney Vacation Club resorts or exchange their points for stays at other resorts worldwide.
Now, coming back to the question – Can you claim Disney Vacation Club on taxes? Let’s break it down.
1. Property Taxes:
As an owner of a DVC property, you are responsible for paying property taxes on it. These taxes are deductible on your federal income tax return as itemized deductions. However, the Tax Cuts and Jobs Act (TCJA) has made changes to this deduction.
Under the new law, the total amount of state and local taxes (SALT) that can be deducted is limited to $10,000 per year. This includes property taxes along with state and local income or sales taxes. So if your property tax bill exceeds $10,000 per year, you won’t be able to deduct the excess amount.
Tip: Keep all your property tax bills and receipts safely as they will come in handy while filing your tax returns.
2. Mortgage Interest:
If you have taken out a mortgage loan to purchase your DVC property, then you can deduct the interest paid on it. This deduction falls under the category of itemized deductions and can only be claimed if you choose not to take the standard deduction.
However, there are certain limitations on this deduction too under TCJA. You can only deduct mortgage interest paid on up to $750,000 of debt incurred after December 15th, 2017 for a first or second home.
Tip: Keep a record of all your mortgage statements and interest payments made throughout the year.
3. Rental Income:
If you rent out your DVC property for a few weeks or months during the year to generate rental income, then you must report it on your tax return. This income is taxable and should be included in your total income.
However, you can also deduct expenses related to the rental such as property management fees, cleaning fees, maintenance fees, etc. from the rental income earned.
Tip: Keep track of all the rental income and expenses incurred throughout the year in order to report them accurately on your tax return.
Conclusion:
In summary, as a DVC owner, you can claim certain tax deductions such as property taxes and mortgage interest paid on your DVC property. However, these deductions are subject to certain limitations under TCJA.
Additionally, if you earn rental income from your DVC property, then you must report it on your tax return and can also deduct related expenses.
It’s always advisable to consult with a tax professional for any specific questions or concerns regarding claiming Disney Vacation Club on taxes.
Remember to keep accurate records of all transactions related to your DVC ownership in order to make filing taxes easier and less stressful.