First-Time DVC Seller Guide: What to Consider
Are you thinking about selling your Disney Vacation Club contract? DVC members do this every day, as it’s an easy way to get some quick cash. However, before you hand your contract to someone else, you should give the matter some thought. Here are a few factors to consider before selling a DVC contract.
How Is the Market?
In July, I will celebrate my tenth anniversary of writing for the DVC Resale Market. Long before that, I was a DVC member. Throughout the process, I’ve marveled at one inescapable fact.
Thus far, the prices of DVC contracts have consistently trended upward over time. I wouldn’t have believed it possible if I hadn’t chronicled it myself. Even so, I’ve witnessed a few lulls in the market.
Most notably, the pandemic proved a popular time for people to sell their contracts. The combination of mass layoffs and hyperinflation led many households to sell their contracts. In the process, a buyer’s market ensued.
Buyers could pick and choose for the best contract, while sellers were temporarily a dime a dozen. While we’ve not witnessed anything like that lately, you should still ask yourself a simple question.
Are you selling in a buyer’s market? If the answer is yes, I’d encourage you to wait. Conversely, if the experts at DVC Resale Market inform you that it’s either a neutral market or a buyer’s market, you can sell your contract…probably. You still have a few more factors to consider.
Will This Change Your Bookings at All?
One of the unique aspects of DVC is that owners often book reservations more than half a year in advance. If you currently possess a DVC reservation, you shouldn’t sell yet.
I mean, you can definitely start the process, but you won’t be able to sell until after your hotel stay. Otherwise, you can’t do it because, well, you’re not a member.
I know that this sounds rudimentary, but you’d be surprised how often it comes up. So, before you sell your contract, make sure that you’re not planning to visit DVC anytime soon.
Are You Grandfathered on Anything?
DVC keeps its owners on their toes by changing the rules every few years. For example, the company is currently threatening to crack down on DVC Points rental abuse and has added a $500 fee for contract resales.
Some of the modified rules directly impact you as an owner. For example, those who have owned DVC contracts since early 2011 are grandfathered in on several membership rule changes. In March 2011, DVC limited the usage of DVC Points for things like Disney cruises and the concierge collection. Members who had owned before then could continue on as usual.
Similarly, in 2019, DVC implemented an unusual rule that effectively created a second group of resorts. Starting with Disney’s Riviera Resort, resale purchases at certain resorts restricted the buyer to booking at that property only.
These rules again don’t apply to members who owned them before January 19th, 2019. So, members who purchased contracts before then may not want to sell them. If you do, you may be subject to the later rules, which could occasionally inconvenience you.
This statement presumes that either A) you have other, newer DVC contracts or B) you intend to join DVC again at a later date with a different contract. If neither of those scenarios applies, this consideration shouldn’t matter to you.
Will You Face Unexpected Tax Liabilities?
Here’s something you may not have considered. When you sell your DVC contract, any profit will count as capital gains. So, you’ll need to report it when you fill out your taxes, presuming that you’re American. I won’t pretend to know how this one works in other countries.
Several years ago, this article circulated across various DVC forums. It’s tax advice from a CPA on this subject. Here’s the pertinent language:
“For gain purposes, your cost is generally your original cost, plus additions for the following items: (1) closing costs incurred when you purchased your timeshare; (2) the portion of your annual maintenance fee (for all years owned) allocated to capital reserves or used specifically for capital improvements (such as a new roof); and (3) any special assessments for capital improvement purposes which you paid.”
As someone who isn’t a CPA, I cannot swear to its accuracy. What I will say instead is that if you read that and thought, “Uh oh,” then you should speak with a tax advisor before doing anything. Otherwise, you could face a surprise during tax season.
If you’re considering selling your DVC contract, now is a great time to explore your options. DVC Resale Market makes it easy to estimate your contract value, learn about the resale process, and connect with a licensed agent for personalized guidance.
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