New Investor
I wanted to know;
Can I make a profit after paying capital gains?
Should this stop me from flipping properties?
Lets say I make $7k on a flipp;
How much will go to capital gains or what will my profit be?
Some appraiser told me I should keep the property for 2 years, before saling.
He made it sound like you can't make any profit if you flipp the property.
Can someone explain or give some advice thanks
:-D
Question: Can I make a profit after paying capital gains?
Answer: Yes
Question: Should this stop me from flipping properties?
Answer: No
Question: Lets say I make $7k on a flipp; How much will go to capital gains or what will my profit be?
Answer: Have no ideal what your income level is, this needs to be directed towards your personal account. The part of any net capital gain from selling Section 1250 real property that is due to depreciation is taxed at a maximum 25% rate.
If you have a taxable capital gain, you may be required to make estimated tax payments. Refer to Topic 355, or to Publication 505, Tax Withholding and Estimated Tax for additional information.
If your capital losses exceed your capital gains, the amount of the excess loss that can be claimed is limited to $3,000, or $1,500 if you are married filing separately. If your net capital loss is more than this limit, you can carry the loss forward to later years. Use the Capital Loss Carryover Worksheet in Schedule D Instructions for Form 1040, to figure the amount carried forward.
Question: Some appraiser told me I should keep the property for 2 years, before saling. He made it sound like you can't make any profit if you flipp the property.
Answer: Why? Did you ask the appraiser why?
I have been in the business for some time know and do vary well at flipping.
Sounds like you need to study up a little more on investing before you jump.
[addsig]
Thanks for your help on my questions.
I understand what your talking about now.
Why did I ask the appraiser?Why?
It's like when I posted on some website in the financial section for private money lenders, one guy e-mailed me and said, " You need to stop talking ghetto and ebonics."
I mean this guy didn't even understand the meaning of hard money lenders.
Thank you for your help once again.
About what the appraiser said, from what i understand, many lenders won't give out loans on a property that hasn't been owned for more than a certain period of time. I'm not 100% on the reasoning behind this, i've been told that the lenders see it as a potential scam, or a lemon.
I don't do flips but I have one that I may flip so I asked my CPA this question as well. If you flip it within one year from closure you will pay the most capital gain (depends on your income) about 33%. If you wait longer than a year it drops a good bit down in the 20 ish percentile....There are no other advantages waiting more than one year. , so the bottom line is if you can wait a year you'll have ahigher profit but you also need to figure in taxes , heating (unless you winterize the place), utilities, insurance, etc that will eat away the profit margin.