Rehab Without Corp
I just finished a rehab I bought with traditional bank financing in my own name. What should I be looking for tax wise? I saved all my reciepts for everything I did. I bought it for $55k. I used $21k to repair. It will sell between $95k and $105k. Is there anything I can do to offset taxes since I dont have a business?
Thanks.
The most obvious solution is to always buy in the name of a land trust for anonymity, beneficiary is LLC for asset protection. Keep receipts for tax basis calculation. Then buy and sell under IRS 1031 to defer gain taxes.
[addsig]
Yeah, well the 1031 rule is not only for business entities, it also applies to individuals.
a 1031 exchange will only work if I want to reinvest my money correct? What if I want to pull out my profit?
This profit realized is likely recognized for tax purposes as taxable income, either capital gain or ordinary income. If one does enough rehabs in his own name, IRS can classify him as a dealer, deny any depreciation deductions and make the earnings subject to Self-employment tax. Commercialking is correct, but playing a high stakes game of chicken with IRS.
[ Edited by Prineville on Date 09/05/2004 ]