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A post in another forum regarding the tax free nature of exchanging vs. renting got me thinking. Since Bluegreen allows preferred members to pay their maintenance fees with points, I wondered if the margin you get in doing so would be taxable.
I asked Dave M on TUG and he believes that it is not taxable. That is terrific since it increases the value of paying maintenance fees with points.
For instance, let's say you were in the 33% tax bracket. If you had a lot of points, then your incremental maintenance fee for new program points is $.026/point.
Bluegreen allows preferred silver and gold preferred members to pay for maintenance fees with points at the rate of about $.05/point.
If you used 10,000 points to pay maintenance fees of $500 on your second account at Lodge Alley Inn, for example. The incremental maintenance fees for that unit would be $260. You would be effectively profiting $240 tax free.
$240 tax free income is the same as $358 taxable income to someone in the 33% tax bracket. Add that to the original $260 and you would have had to rent that unit for over $620 to be equivalent to that $.05/point. And, you don't have to wait to get paid, find a renter or risk damage. That is a tax equivalent rental of $.062/point.
That is a mighty fine benefit.
I asked Dave M on TUG and he believes that it is not taxable. That is terrific since it increases the value of paying maintenance fees with points.
For instance, let's say you were in the 33% tax bracket. If you had a lot of points, then your incremental maintenance fee for new program points is $.026/point.
Bluegreen allows preferred silver and gold preferred members to pay for maintenance fees with points at the rate of about $.05/point.
If you used 10,000 points to pay maintenance fees of $500 on your second account at Lodge Alley Inn, for example. The incremental maintenance fees for that unit would be $260. You would be effectively profiting $240 tax free.
$240 tax free income is the same as $358 taxable income to someone in the 33% tax bracket. Add that to the original $260 and you would have had to rent that unit for over $620 to be equivalent to that $.05/point. And, you don't have to wait to get paid, find a renter or risk damage. That is a tax equivalent rental of $.062/point.
That is a mighty fine benefit.
kind of why I favor Lugar's idea of a national sales tax - anyone that buys, pays. Doesn't matter if you're a resident or not, and you can't cheat cuz it's collected POS.
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