Paying Taxes

When I get the profit from a rehab do I have to pay taxes on that profit and how do I go about that? Thank you

Comments(3)

  • c_ostermeier28th August, 2004

    Yes, you need to pay taxes on profit. But you need to talk to an accountant to see how much counts as profit in your situation. A large part of this depends on how you arranged the transaction and if you are using the profits to buy another property.

  • patrecejames28th August, 2004

    thanks for the input co but please elaborate on "how much counts as profit in your situation"[ Edited by patrecejames on Date 08/28/2004 ]

  • c_ostermeier29th August, 2004

    Profit is what is left after the expenses. How the deal is structured can change what the IRS would consider valid expenses/deductions. A good accountant can help you locate all of the valid expenses and possibly give you advice on how to structure future transactions so as to limit your tax liability. Also you may not need to pay capital gains on the profit if you use it to purchase another property. (This is subject to certain rules.) There are also rules on income from loans versus income from rents or sale of property.
    For any more detail for your situation contact an accountant in your area. For any more questions of a general type I may still be able to help.

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