Do house flippers have to pay a penalty tax or fee for reselling the house so soon, as opposed to waiting for, say two years?
2006-09-25 10:37:29 · 9 answers · asked by libertino85 2 in Business & Finance ➔ Renting & Real Estate
What if I only got a six month loan as opposed to a 30 year loan? Would that make any difference?
2006-09-25 11:20:27 · update #1
Just a higher tax rate for stuff that you keep less than a year, as short term capital gains might as well be ordinary income. Of course, there are always 1031 exchanges to effectively roll your overall holding period into something longer.
Need to own and live in it 2 years to take advantage of Section 121, which is a tax break for personal residences.
So it's not that you have to pay higher taxes or fees, although you do have the expenses of selling. It's what you *don't* get - the tax breaks for holding it longer or for living in it - that are the difference.
2006-09-25 11:08:32 · answer #1 · answered by Searchlight Crusade 5 · 1⤊ 0⤋
Yes, they pay capital gains if they have not lived in the house as their primary residence for at least 2 out of the past 5 years.
2006-09-25 17:39:39 · answer #2 · answered by dualspace 3 · 0⤊ 0⤋
Would you reconsider house flipping? As housing market continues to slump, it will be difficult to unload it. Especially you want a loan as short as 6 months. Usually, it takes years for housing market to resolve, let alone 6 months.
http://money.cnn.com/2006/09/25/news/economy/homesales2/index.htm?postversion=2006092513
2006-09-26 04:34:42 · answer #3 · answered by Price is what you pay for value. 3 · 0⤊ 0⤋
Boy; understanding IRS taxes is like understanding women (no offense ladies, that's a compliment, I think) In any event you best go read these IRS publication links provided by our research department.
IRS: Gain and losses on real property:
http://www.irs.gov/publications/p544/ch01.html
IRS: Deductible costs when purchasing real property:
http://www.irs.gov/publications/p551/ar02.html#d0e2000
IRS: Tax information when buying a home: http://www.irs.gov/publications/p530/ix01.html
Buena Suerte
2006-09-25 18:12:58 · answer #4 · answered by newmexicorealestateforms 6 · 0⤊ 0⤋
The two year rule applies to personal residence, not investment property. Flipping is risky investment and typically you have to have a higher % down payment.
2006-09-25 17:50:55 · answer #5 · answered by Alterfemego 7 · 0⤊ 0⤋
You have to pay taxes on homes you don't live in. If you lived in it for 2 out of 5, don't run a business out of it and sell for under $250,000.00 you don't have to report to IRS, otherwise you'll be paying taxes.
2006-09-25 17:43:34 · answer #6 · answered by Kathleen M 4 · 1⤊ 0⤋
principle residence has to own for two years to escape taxes. Best way is to move in and fix while living there for two years. Option B is to fix and sell. tht's a business......
2006-09-25 17:43:04 · answer #7 · answered by zocko 5 · 0⤊ 0⤋
I agree with the other responses, well said
2006-09-25 17:46:27 · answer #8 · answered by skywatcher 1 · 0⤊ 0⤋
20% down...
2006-09-25 17:46:07 · answer #9 · answered by Anonymous · 0⤊ 0⤋