Owners and would-be purchasers of vacation second homes should be buoyed by two developments taking shape this month. The first is on Capitol Hill, the second is about to get under way in Miami.
On Capitol Hill, discussions with key congressional staff members last week confirmed that the tax-reform schedule for 1985 is at least six months behind the Reagan administration's original plans. Legislation in 1985, with effective dates any time in the first half of 1986, no longer is politically feasible, they say. The prospects for enactment of comprehensive tax code changes -- including interest-deduction limitations on second homes -- will depend heavily on the White House's forthcoming third version of its reform package, due some time in September.
"They've got a very leaky boat they're trying to float," in the words of one Senate aide. The White House proposal in its current form is a multibillion-dollar net revenue loser over the coming decade, intensifying the federal-deficit problem rather than relieving it.
Moreover, the aide said statistical projections being presented to the tax-writing House Ways and Means Committee and the Senate Finance Committee show that any abrupt, major tax overhaul with early effective dates would have such sharp repercussions on important segments of the economy -- particularly residential real estate -- that "the members of Congress frankly aren't going to sign off on it without long transition provisions."
Translated into practical real estate terms, that means that even if some form of comprehensive tax-simplification package were enacted in the 1986 congressional election year, the odds are growing that it not only would grandfather existing owners but contain more generous phase-in periods than the current proposals.
For second homes and condos, the present Reagan package offers a 10-year phase-in, leading to a cap on interest deductions of $5,000 beyond a taxpayer's net investment income. For any post-1985 tax bill to get past Congress, it would need to be considerably softer.
Another piece of potentially favorable news for the country's thousands of vacation condo owners comes from Florida. The first large-scale, international network offering exchanges of so-called "whole ownership" units exclusively is about to begin.
The program, known as Vacation Visa, will allow owners of condo units -- but not time-share units -- in participating resorts and condo hotels around the country to swap chunks of vacation time with each other at nominal costs.
Say you buy a condo this fall in a resort with a membership in Vacation Visa. Typically, the developer of the resort will have paid the $295 three-year unit-membership fee to Vacation Visa on your behalf.
Now let's say you want to spend two weeks in Cancun, Mexico, followed by a week in the Swiss Alps or Hawaii, or a couple of weeks at Hilton Head, followed by a trip to Aspen, Colo. You send in a condo-slot request with a $79 fee to Vacation Visa's computer center in Buffalo, and offer a like amount of time at your condo. If units are available on the network (the program expects that to be the case for between 70 and 80 percent of all requests this year), you've got your reservation even if no one wants to use your condo for the immediate future.
Beyond the $79 request fee, there normally will be no charges for your use of the condos during the week or two. Because all of the units in participating resorts are in the luxury category -- $100,000 and up -- condo-swappers will be getting the use of properties that often cost $150 or more per day in the "high" season. Although they also will be putting their own units on the exchange, most condo owners won't notice the "lost" rental revenue at the bottom line. That's because most participating resort communities use so-called rental pools, revenue pots in which all unit owners have pre-established shares of rental income and expenses.
What are the pluses and minuses of Vacation Visa for condo owners? In addition to the obvious potential attractions of getaways at exotic spots at low costs, there are others. First, the program has nothing to do with time sharing, and thus the participating resorts and units are likely to be of higher quality. Second, the firm that plans to announce this program later this month, Worldex Corp., runs the second-largest exchange network in the time-share field -- the 500-resort, 33-country Interval International system -- and did more than 28,000 exchanges through its computer bank last year.
On the minus side are mainly question marks. Will the 100 participating resorts Vacation Visa expects in 1985 be enough to generate successful swaps when and where condo owners demand them? Will enough unit owners in participating resorts go "on line" to make the system take off?