Taxes on Selling a "flipped" house?

Question

I am going to be purchasing a house to flip. It should take me about 10-12 weeks to complete. I should profit around $40,000. Will I pay Capital gains on this amount? If so, would I pay less if I purchase the property through a company instead of personally. (If I open a company and buy the house under the company name). I have heard that capital gains is around 35% of the profit. Is this what you have heard?

Thanks!
Kimberley

Answer 1

An accountant would be worth paying $100 for an hour to answer this for you.

Basically if you turn around and re-sell in less than two years, it's considered an investment property, or if you use it for profit (rent it out) it's investment property.

You can deduct improvements you made on it as an investment, but you will have to pay capital gains tax. Also, don't forget, you may be paying realtor commissions - 6%+/- depending where you live, transfer taxes, etc.

Is that $40k based on what you think the difference is between your purchase price and sale price, or is it what's left after accounting for all the other closing costs, commissions, insurance, etc.?

Oh, and don't forget - in many areas the housing market sucks right now for sellers. That means you might get a good deal buying one, but you might sit on it for a while before being able to "flip" it.

Answer 2

capital gains is so misunderstood.
once you do one..you realize how easy it is
your gain. 40k..so during the time you own you get to claim all your expenses..taxes, legal, can of paint, signs, ads, etc.. then at the bottom of the capital gains..it says..at the very bottom..
take 50% off and claim on line. (think 127 and with schedule 3)
keep all your receipts in case you get audited..
it isn't as hard as it sounds..
just do the forms..

Answer 3

i think of you have dates extremely incorrect. Your information says that the homestead became offered on 4/02, it somewhat is after the guy grew to alter right into a widow, which you have as 3/ninety six. If the homestead became offered after the lady grew to alter right into a widow, there isn't any step-up in foundation. If the homestead became offered in the previous the lady grew to alter right into a widow, then there could be some step-up in foundation, even inspite of the shown fact that, the advancements could want to be split as to in the previous becoming to be a widow, and after becoming to be a widow, as a results of fact the advancements in the previous becoming to be a widow would desire to already be coated interior the homestead value of $390K. to boot, the widow could additionally comprise in her value foundation, the last expenses that have been paid on the time the homestead became offered, and additionally last expenses while the homestead became offered. additionally, as long as she has observed the two out of 5 rule (living interior the homestead as her known place of abode for 2 out of the final 5 years on the instant preceeding the sale of the homestead) she would not would desire to pay taxes on beneficial properties as much as $250,000 on the sale of the homestead.

Answer 4

You should never do something like this, if you do not know all the laws and process which apparently you do not know. If you did you would not be asking here. Take a course, you will learn all you need to know.

Answer 5

You could re-invest the money and avoid the taxation.

it is called a 1031 or like-kind exchange
http://www.turnkeyproperties.org/resources_details.php?id_art=65538&img_id=0

Answer 6

May you get every thing you deserve you flipper.
http://www.breakingbubble.com/index.htm