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This year we had a little excess so we sold some points. ( we paid for rooms in AoA without points and then stayed at Vero with points but had a bunch left)
My question is :
I know we will be taxed, but does anyone know the rate and how much I should put aside?
Example if I made $2000.00 is 40% the tax rate ? or is it less?
thanks for any help with this!
While you have to report the gross amount on Schedule E, you usually don't have to pay taxes on that amount. Instead, you pay it on your profit.Quote:
Originally Posted by Mackflava99
When you own a timeshare unit that you use as a rental property, your ordinary and necessary expenses are deducted from its rental income. This means you can immediately deduct your maintenance fees and any mortgage interest that you pay for the timeshare, even if you couldn't otherwise deduct it. The IRS also lets you deduct any other expenses that you incur, like advertising or management fees.
First off, tax rates are graduated. Example, this year if you are filing married, approximately the first $20,000 is taxed at 10%, the next $55,000 at 15% and the next $75,000 at 25% and then I think there is a higher amount that kicks in for over $150K.Quote:
Originally Posted by Mackflava99
If you sold to a broker you might get a 1099 reporting how much they paid you for the points, and that would be reportable as income, but as mentioned you should and can offset that income with your basis in your points. You should be able to calculate out what the historical basis is for your points, and add to that the cost per point for annual maintenance and then any other incidentals, and then offset that against the revenue received for what should be your eventual net taxable amount.