cost basis on sale of disney points

[2013sho]

bought points in 1995 from disney.

in order to retain ownership the points i had to pay maintenance/ taxes of the  property for 28yrs

minus the occasional rental of the points which i received 1099 misc. for.

QUESTION-is my basis cost the23 years to keep property  plus the cost of initial price of each point

[GeorgeM777]

After further review, given that your Disney points are a type of flexible timeshare where property ownership is based on a "right to use" model as opposed to actual ownership, your maintenance costs/fees would not be part of your cost basis.  Based on your post, your Disney points represent personal use property, as opposed to investment property, and the costs associated with owning these points are neither tax deductible, nor can you include them in your overall cost.  Therefore, your cost basis just includes your original purchase price. 

@2013sho 

[Edited 03/13/2023 | 11:35am PST]

[Opus 17]

I don't believe any of your costs are adjustments to basis.  You might have been able to deduct the costs in years you "rented" your points and reported taxable income. 

Maintenance: Not allowable.  The cost of maintaining personal property is never an allowable adjustment to basis.  The cost of maintaining investment property is deductible in the year the maintenance was paid against the income produced by the property.  If the property did not produce income, you can choose to capitalize your maintenance costs, but that requires attaching a written statement to each year's tax return documenting the capitalized cost.  It's too late to go back and do that now. 

Property taxes: Not allowable.  Property taxes for personal property are only deductible if you are the legal owner of real property against who the tax is assessed. (You probably aren't the owner of real property.  Is there a deed in Florida with your name on it?  You are probably the owner of a right to use certain property subject to certain conditions.)  Even if the taxes were deductible, they would have been deductible in the year paid, and they can't be added to your basis for failing to claim the deduction at the time.    Again, if this was investment property, you could deduct the costs against investment income, or capitalize the costs on your tax return.  It's too late to go back and do that now. 

If in certain years, you "rented" your points, you might have been able to deduct your costs against your rental income.  If you did that, then you have no costs that could possibly be allocated to the basis because that would be double-dipping, and if you failed to deduct the costs against your rental income, you can't go back and fix that now because the deadline to amend a tax return is 3 years. 

As far as I can see, the only part of your annual fee that you could add to your cost basis is any fee that was required to maintain your ownership (was an investment in the property) and that was NOT maintenance or property taxes.  Basically, Disney would have to come to you and say, "We know you paid $10,000 for your points, but they are worth $20,000 today.  So either we buy you out at $10,000 and sell them to someone else, or you pay us another $10,000 to keep them.

[Opus 17]

Let me amend my answer to note that improvements are allowable adjustments to cost basis. Improvements are permanent attachments to the real property that add value or extend the useful life of the property. Typical improvements would be a new roof, new air conditioner or hot water heater, new flooring, kitchen remodeling, and so on. If some of your annual assessment include improvements and you have statements to prove it, you can include the cost of improvements as an adjustment cost basis.