Selling DVC Points vs Contracts: Tax Implications

A common question from DVC owners: "Can I just sell some of my points instead of the whole contract?" The answer is more nuanced than a simple yes or no (and the choice has real implications for FIRPTA and your tax position.

You Cannot Sell Individual Points

DVC points are not a separate tradeable asset) they are tied to the DVC contract (deed) that describes a specific resort, use year, and point count. You cannot sell 50 points while retaining the remaining 150 points on the same deed. The deed is the property, and the deed goes as a whole.

What you can do:

• Sell the entire contract (the most common approach; the whole deed changes hands
• Split a contract and sell part of it) if your deed is large enough, you can sometimes split it into two smaller deeds and sell one while retaining the other
• Rent out points instead of selling (keep ownership but earn income from the points without triggering FIRPTA

Selling the Whole Contract: Standard FIRPTA

This is the most straightforward scenario. You sell the entire deed. The closing agent withholds 15% FIRPTA on the full sale price. You file Form 1040-NR after year-end to claim your refund. Everything covered elsewhere on this site applies directly.

Selling a Split Contract: Same FIRPTA Rules, Smaller Sale

Some DVC owners with large contracts (200-400 points) split the deed into two smaller deeds through a process typically facilitated by your home resort or a DVC resale attorney. You then sell one deed while keeping the other.

FIRPTA applies to each deed sale separately. If you split a 300-point contract into two 150-point deeds and sell one:

• FIRPTA withholding is 15% of the sale price of the 150-point deed being sold
• Your cost basis for the sold portion is proportional) if you paid $30,000 for the 300-point contract, the cost basis of the 150-point sold portion is approximately $15,000
• You file Form 1040-NR reporting only the sale of the sold deed
• The retained deed remains your property and has no immediate tax consequence

Splitting a DVC deed has processing costs and may be subject to Disney's ROFR. Consult a DVC resale attorney before proceeding.

Renting Out Points Instead of Selling: No FIRPTA at Rental Stage

If you rent out your DVC points to third parties instead of selling the contract, the income is US-source rental income (taxable in the US but not subject to FIRPTA withholding at the time of the rental transaction. FIRPTA applies to dispositions of real property interests (sales), not to rental income.

However, rental income from DVC rented to US persons is subject to a different withholding rule under IRC Section 1441: the payer (the person renting your points) should withhold 30% of the rent and remit it to the IRS. In practice, many DVC rental transactions do not follow this rule, creating an unreported income issue for non-resident owners. If you are renting DVC points as a business, consult a tax professional about proper US tax treatment of the rental income.

When you eventually sell the contract, FIRPTA withholding applies at that point as normal. If you have been claiming rental income and depreciation, the depreciation recapture rules also apply at sale.

Which Approach Has the Best Tax Outcome?

For most non-US DVC owners who used their points personally (no rental business), selling the whole contract is the simplest approach with the clearest FIRPTA outcome. Splitting the contract works well for owners who genuinely want to retain part of their membership. Renting points as a business adds significant US tax complexity) it should not be undertaken without professional advice on the ongoing reporting obligations.

Frequently Asked Questions

Can I sell part of my DVC points without selling the whole contract?
Not directly. Points are tied to the DVC deed. You can split a large deed into two smaller deeds and sell one while retaining the other, but you cannot sell isolated points from an undivided contract.

Does FIRPTA apply to DVC point rental income?
No. FIRPTA applies to sales (dispositions) of US real property interests. Rental income from renting out DVC points is not subject to FIRPTA, but it may be subject to other US withholding requirements under Section 1441.

If I split my DVC contract and sell half, how is the FIRPTA calculated?
FIRPTA withholding is 15% of the sale price of the deed being sold. Your cost basis for that deed is approximately proportional to the split. If a 300-point contract is split equally and you sell the 150-point portion, allocate roughly half your total cost basis to the sold portion.