FIRPTA and Multiple DVC Contracts: How Combined Sales Are Taxed

Some DVC owners have multiple contracts, maybe one at Saratoga Springs and another at the Polynesian, or several small contracts accumulated over the years. When you sell more than one in the same tax year, the FIRPTA rules apply to each sale individually, but your tax return combines them all.

Withholding on Each Sale

Each DVC sale triggers its own FIRPTA withholding. If you sell a $20,000 contract and a $15,000 contract, you'll have $3,000 withheld on the first (15% of $20,000) and $2,250 withheld on the second (15% of $15,000). Total withholding: $5,250.

Each sale gets its own Form 8288 filing by the closing agent. You'll receive separate Form 8288-A copies for each transaction.

Reporting on Your Tax Return

On your 1040-NR, you report each sale separately on Schedule D (Capital Gains and Losses). Calculate the gain or loss on each contract individually:

• Contract 1: Sold $20,000 minus purchased $14,000 = $6,000 gain
• Contract 2: Sold $15,000 minus purchased $18,000 = $3,000 loss
• Net: $6,000 gain minus $3,000 loss = $3,000 net gain

Your actual tax is based on the net gain ($3,000), not the individual gains. At 15% long-term rate, that's $450 in tax. You had $5,250 withheld. Refund: $4,800.

The loss on Contract 2 directly reduces your tax by offsetting the gain on Contract 1. This is one advantage of selling multiple contracts in the same year: gains and losses can offset each other.

Timing Considerations

If you have contracts with gains and losses, selling them in the same calendar year is usually better than spreading them across two years. The loss offsets the gain on a single return, reducing your tax and increasing your refund.

If all contracts have gains, there's less timing benefit. But selling them in the same year still means one tax return instead of multiple returns in consecutive years, which saves on professional preparation fees.

Form 8288-B for Multiple Sales

You can file separate 8288-B applications for each sale. If one contract has a large gain and another has a loss, the 8288-B for the losing contract can request zero withholding (since the actual tax on that sale is zero). The 8288-B for the gaining contract can request reduced withholding based on the net gain after offsetting the loss.

This gets complicated quickly, and it's one of the situations where a tax professional's help is especially valuable. They can coordinate the 8288-B filings to minimize your total withholding across multiple sales.

Reporting Across Countries

If you're a Canadian, UK, or other non-US resident selling multiple DVC contracts, you report all the sales on your home country return as well. The same offsetting rules generally apply: gains and losses can net against each other. And the foreign tax credit for US tax paid applies to your overall US real property transactions, not contract by contract.

Multiple DVC sales in a single year create more paperwork, but they also create more tax planning opportunities. If you're thinking about selling more than one contract, talk to a tax professional before you start. A little planning can save you a lot of money.