Today is the deadline for mailing tax forms like 1098s, 1099s and W-2s to their respective recipients. With that in mind, let's take a quick look at a couple of potential deductions available to DVC members.
The first deduction available to most DVC members relates to the property taxes paid on DVC ownership. DVC owners are not required to pay the 12.5% hotel tax imposed at most Orange County resorts. The reason is that DVC members are not hotel guests--they are deeded property owners. Rather than renting a room for the night, DVC members are simply using the property they have purchased.
Along with that ownership right comes an obligation to pay property taxes on the real estate. Property taxes are one component of the annual dues paid by DVC members. Similar to taxes paid on one's primary residence, DVC property taxes are deductible by many US taxpayers who itemize their deductions.
Members should refer to their 2008 annual dues statement (received sometime in the last 30 days) for the amount of property taxes paid for 2007.
The second deduction which may be available to members is interest on a DVC purchase financed through DVC. DVC will issue members a 1098 detailing the amount of interest paid for 2007. The IRS requires that 1098s be mailed no later than January 31st, so members should begin receiving them shortly. For many, the 1098 interest is a deductible expense. Those who have financed their DVC purchase with a home equity loan (against their primary residence) may also be eligible for a deduction.
The key to deducting interest paid often relates to how the debt is secured. In the case of DVC's own financing, the loan is secured by the property (DVC ownership deed.) This is also true of home equity loans. By comparison, those who have financed a purchase via a low interest credit card offer or a signature loan (which is typically the case when financing a resale purchase) will most likely not be eligible to claim a deduction.
NOTE: Since all situations are unique, we strongly recommend that individuals receive guideance from their tax professional before claiming these or any deductions related to their Disney Vacation Club ownership.
