TAX LAWS

Comments(11)

• 
  Martman2nd October, 2003

  The capital gains tax changes after you have owned the property for a year and I believe even more after 5 years.

• 
  jmBROKEr2nd October, 2003

  You pay Long Term Cap Tax on prop which you hold for 1+ years, currently 15% till 2008.
  
  If the prop is primary residence and hold for 2+ year, the first 250k (single) or 500k(married) is exempt from taxes.
  
  If you sell less than 1 year, whether primary or not, you pay short term cap tax which can be as high as 50% depending on your income status.

• 
  mr19642nd October, 2003

  Is it better to flip the properties or lease for year or two and then sell?

• 
  Lethe2nd October, 2003

  You don't have to own the house in order to 'flip" it. I have seen elsewhere that if you don't actually own the property but are able to make money from it, it isn't considered capital gains.
  
  As always check with competent advisors (lawyer, CPA, etc.)

• 
  fap3rd October, 2003

  I have a friend who does 1031 flips on wholesaleing properties, He has been doing RE for about 15 years and has a huge network set up. Every once and a while he gets hit with a big tax bill but not to often.
  
  By the way he does a wholesale deal and rolls the profit into a Buy and hold, not another wholesale deal.

• 
  DaveT3rd October, 2003

  Quote:You don't have to own the house in order to 'flip" it. I have seen elsewhere that if you don't actually own the property but are able to make money from it, it isn't considered capital gains.You are absolutely correct.
  
  Flip income is ordinary income -- not capital gains -- but still taxable income and subject to self-employment taxes as well.

• 
  Lethe3rd October, 2003

  Quote:
  
  Flip income is ordinary income -- not capital gains -- but still taxable income and subject to self-employment taxes as well.
  
  
  Question for you DaveT,
  
  This can then be done through a C-Corp and then corporate tax law applies, n'est pas?

• 
  DaveT3rd October, 2003

  Mais, oui !

• 
  DaveT4th October, 2003

  Quote:I have a friend who does 1031 flips on wholesaleing properties,...fap,
  
  I hope there is more to the story than you relate here. Flip property (you did say wholesaling, which is flipping) is not eligible to participate in a 1031.

• 
  balto4155th October, 2003

  Question for you DaveT,
  
  This can then be done through a C-Corp and then corporate tax law applies, n'est pas?
  [/quote]
  
  C-Corp best suited for flipping than an S-Corp? I'm looking to setup an S-Corp for flipping.
  
  Anyone know if it's simple to obtain financing via your corp to purchase property?

• 
  InActive_Account5th October, 2003

  Taxes? Make sure you have enough documented expenses to offset gains. Expenses can be quite hight in dealing with distressed properties