Taxation On Sale Of MH
I would like to start buying and turning MH in my area. I would like to know how taxation works on these? Is it similar to renovating and turning a SF home or are your profits taxes in some other manner?
Thanks!
The tax rules that apply here are not that different then for any other asset (stock or RE for example).
You are buying, holding for a 'short' period and then selling at a profit. You pay the tax on the profit.
If you hold long enough then you can switch from short term profits to capital gains.
You can also look at 1031 exchanges but I do not think you will find the costs and hassle will be worth the difference if you are making a small amount per deal.
Get a CPA or otherwise qualified tax preparer who has direct experience deal with tax returns involving RE.
Think of the tax this way. You get a job. They offer to give you a raise. You rarely tell them that you can not take it because some of the increase will be taken in taxes.
John
PS. One positive of paying the taxes due... When it comes time for a loan lenders can understand income and taxes paid. If you show lots of losses or otherwise no income on your 1040 they are less interested in lending (at competitive rates).
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