WKORV Real Estate Taxes?

Where do we find the real estate tax portion (%) of our MF bill for WKORV?

For WKV - they break it out, and for WSJ they send a bill (eventially after a couple of years...), but what do they do for WKORV?

If anyone knows the amount (or %) for a 2Bd LO Deluxe - please let me know - TIA

Is there a breakdown for Ad Valorem tax on your bill? I think that is the real estate tax. I haven't done ours yet, so haven't looked to be certain.

Denise L said:

Is there a breakdown for Ad Valorem tax on your bill? I think that is the real estate tax. I haven't done ours yet, so haven't looked to be certain.

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I will take a look - considering all the TUG WKORV owners - I am surprised that no one chimed in. Is that because they do not bother with writing off a Real Estate Tax for a TS? From my reading - the property tax for a TS are a tax deduction. From the definition below - if this Ad Valorem is a annual property tax assessement that is is turn paid for via the MFs by an owner, then they are considered a property tax (or at least could be argued as such to the IRS)

From Wikipedia:
An ad-valorem tax (Latin: by value) is a tax based on the value of real estate or personal property.

Ad-valorem taxes can be property taxes or even duty on imported items. Property ad-valorem taxes are the major source of revenues for state and municipal governments.

An ad-valorem tax is typically imposed at the time of a transaction (a sales tax or value-added tax (VAT)), but it may be imposed on an annual basis (property tax) or in connection with another significant event (inheritance tax or tariffs). The alternative to ad-valorem taxation is a fixed-rate tax, in which the tax base is the quantity of something, regardless of its price. For example, in the United Kingdom, a tax is collected on the sale of alcoholic drinks that is calculated on the quantity of alcohol contained rather than the price of the drink.

Ad-valorem taxes are important to customs brokers importing goods into the United States of America. They can also be assessed on other property, such as cars, as is the case in the states of Georgia and Kentucky.

"Ad-valorem" is used frequently to refer to property values by county tax assessors. In many states, the central appraisal district (CAD) sends certified values to the county tax assessor, who determines the final tax rate to be imposed on the property. Other states use a state tax commission (STC), which notifies the appropriate taxing authorities of the assessed value of property within their billing jurisdiction.

Here is the WKORV Ad Valorem Tax is for 2006:

$172.32 (2Bd Deluxe LO)
$125.06 (2Bd Premium LO)
$105.51 (1bd Premium)

So - I guess I answered my own question - maybe?

I guessimated $150 for ours - pretty close...

Caveat Emptor - I take no responsibity if this tax is not deductable - consult your tax advisor.

Also - for you WSJ owners - you paid a property tax to the USVI for your TS.

David,

Ad Valorem is what we write off for property taxes on our WKORV every year, which is why I mentioned it in my post. I think it was $76 the first year...now up to $125 for our OV lockoff.

Denise L said:

David,

Ad Valorem is what we write off for property taxes on our WKORV every year, which is why I mentioned it in my post. I think it was $76 the first year...now up to $125 for our OV lockoff.

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As you should (I hope others do...) - it is $125.06 for you (from MyStarCentral)

Not being a WKORV owner, I don't know the source of the numbers.

However, the tax law is clear that if the tax is levied against the individual owners, it's deductible. If you pay it separately (as is done for California resorts) or if it is separately stated on a MF bill, it's deductible. However, if you have to go to the resort's financial statements and find the line for Ad Valorem tax and look across to the per unit charge for that item, that means the tax has been assessed to the resort and it's not deductible.

You can check this out in IRS Publication 530, among other places. Page 3 includes a discussion of items that cannot be deducted as property taxes. MFs are listed as one of those items. None of the MFs are deductible (unless you are treating the MFs as an expense against rental income).

Thanks Dave - I had read that publication.
With these types of taxes - there is a certain amount of gray area. For WKORV - the Ad Valorem tax is assessed yearly - and is incorporated into a bill that is called the MFs, but it is actually a composite bill. It is assessed to the resort, but the owners pay it. Therefore, it could be argued that since this tax is directly passed on to the owners as a clear line item in the MF bill - that this tax is paid by the owner and not the resort UNLESS the resort passes their deduction for this tax onto the owners (which is not happening from what I can tell).

I guess - the bottom-line is that is it worth the ~$30 saved to be challenged in a tax audit... If you are into AMT (Alternative Minimum Tax) - the benefit for doing this is drastiscally reduced (for us lucky ones WAY into AMT).

Also - tax-wise - it is clear that we should have waited to Jan 1st to get married. lol

There is no gray area here. I gave you the summary version from the IRS publication. The underlying law and regulations are long and complex, but very specific. The simple answer is that if it's buried in the MF, you are not supposed to deduct it. The reason is that the property tax is deductible only by the person or entity upon whom the tax is imposed by the taxing jurisdiction. If the resort doesn't pass it on to you as a separate item on your bill, you can be sure the tax was imposed on the HOA, not on each individual owner.

Dave M said:

or if it is separately stated on a MF bill, it's deductible.

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It is definitely listed separately on the MF bill.

DeniseM said:

It is definitely listed separately on the MF bill.

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I believe Dave's point is that if it is in the MF bill - and not separated out as 'tax' vs. MF (as with WKV), then accordingly it is not tax deductable.

This is a good example of a 'gray' area (which hapens in tax law) - how 'separate is separate' and how 'buried is buried' - it is listed in the MF bill (and not as a separate bill) - however, it is listed as a clear separate line item - and it is certainly not buried or part of another line item.

Dave - I have read the publication (and I do our taxes - so I wanted to understand) - this is why I asked the question in the first place. It is not clear - in this case - to whom the tax was levied upon. In my reading - I would argue that it is clearly being levied upon the owners as they make up the HOA.

As we are far into AMT (in CA) - it doesn't matter to our tax bottom-line - However, other WKORV owners may want to take note, and be cautious here.

Consult a tax advisor, and decide whether or not it is worth deductiing (vs. the risk). My tax consultant takes a pretty conservative approach to these thing - he is too busy right now to ask him, but after 4/15 - I will ask his opinion - which I believe he will say it is not worth the risk, and certainly if there is minimal benefit for us considering AMT.

DavidnRobin said:

Dave - I have read the publication (and I do our taxes - so I wanted to understand) - this is why I asked the question in the first place. It is not clear - in this case - to whom the tax was levied upon. In my reading - I would argue that it is clearly being levied upon the owners as they make up the HOA.

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That's why I provided the link to the IRS publication. As stated at the link, "You cannot deduct these assessments [MFs] because the homeowners association, rather than a state or local government, imposes them." Thus, what you pay to the HOA is not a tax and is not deductible.

More than you ever wanted to know....

Unlike a partnership, where individual items flow through to the partners, retaining the same character as to the partnership, a homeowner's association is a separate taxable entity and either pays tax on all of its income (very unusual) or on its net investment income. The HOA chooses to assess owners an annual fee and normally gives each owner a financial statement and budget supporting the amount of the annual assessment. But the items don't flow through from the HOA, whether interest expense or taxes.

The Federal Income Tax Regulations state, with few exceptions not applicable here, that "taxes are deductible only by the person upon whom they are imposed." (Income Tax Regulations § 1.164-1). "Person", for tax purposes includes any individual or entity. Thus, if the governmental entity imposes the tax on the HOA, the owner can't deduct them. The owners are members of the HOA, but since the HOA is a separate entity, the tax attributes don't flow through to the owners.

Similarly, you are probably a member of a number of other organizations, AAA for example. But you can't take a deduction for the portion of your annual AAA fee that relates to taxes that AAA pays. Same theory.

Thus, as I stated, if you have to go to the financial statements or the budget to find the number, it's not deductible. If the tax is billed separately to you or listed separately on the MF bill, it should be deductible. That's because some jurisdictions assess the tax against each deeded week but bill it to the HOA for convenience and the HOA passes it on by showing it separately on the MF bill.

It's clear to me that some resorts list the tax separately on the MF bill even though the tax is assessed against the HOA. In my practice, I take the position that the owner can rely on what is shown on the MF bill to justify claiming a deduction.

DavidnRobin said:

My tax consultant takes a pretty conservative approach to these thing - he is too busy right now to ask him, but after 4/15 - I will ask his opinion - which I believe he will say it is not worth the risk, and certainly if there is minimal benefit for us considering AMT.

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What good is a tax consultant who's only available after 4/15? just busting chops...

Can we write off the airfare needed to view our property or anything else. Lets here from some of the crafty TUG's out there we all could use some help to offset the high MF's

No deduction is allowed for travel to visit your timeshare. Assuming you personally use it sometimes or exchange it, it's a personal asset, not an investment asset.

Because you don't manage the maintenance of the timeshare (the HOA does that), you wouldn't even be able to deduct airfare to view your timeshare even if you used it exclusively for rental purposes!

Allowable timeshare-related deductions are discussed in this Income Taxes and Timeshares article from the TUG Advice section.