Your "cost" side of the ledger includes purchase price, all clean-up, repair and holding sosts, any and all advertising and virtually anything that relates to the acquisition and sale of the property.
Subtract the above from the "net to seller" on the HUD-1 and you will get taxable income.
[addsig]
Since you are flipping, the holding period is irrelevant. Your sale profit is ordinary (self-employment) income not a capital gain. Your sale is taxed as a dealer disposition even if your holding period is longer than one year. Consult your tax advisor for specific details.
However, for the property you hold for investment and which qualfiies for capital gains tax treatment, you need to refer to the IRS rules that define your holding period. According to the IRS, the first day of your holding period is the day AFTER settlement. When you sell, the settlement date is the last day of your holding period.
For long term capital gains, your holding period needs to be at least one year and a day. Buy on Jan10, and sell on Jan 10 next year, you fall one day short of long term capital gains tax treatment.
If it is a single member LLC treated as a disregarded entity, then claim all your rental income and expenses (including mortage interest) on Schedule E as if the LLC did not exist.
If your LLC is a partnership or corporation, then claim all the rental expenses actually paid by the LLC as business expenses including the mortgage interest. No need for you to disregard the mortgage interest expense deduction just because the loan was issued to you personally.
If the accountant objects, just bring out your LLC corporate documents and show him that one of the first resolutions passed by your LLC was to assume the loans on the rental property retroactive to the date the LLC acquired title..[ Edited by NewKidInTown3 on Date 04/07/2009 ]
Go to www.financialstability.gov and click on the home affordable link it will give you all the details of the programs. None are mandatory for the lenders all optional with incentives for them.
To simplify:
Your "cost" side of the ledger includes purchase price, all clean-up, repair and holding sosts, any and all advertising and virtually anything that relates to the acquisition and sale of the property.
Subtract the above from the "net to seller" on the HUD-1 and you will get taxable income.
[addsig]
check w/ your CPA, I was given some bad advice..
Since you are flipping, the holding period is irrelevant. Your sale profit is ordinary (self-employment) income not a capital gain. Your sale is taxed as a dealer disposition even if your holding period is longer than one year. Consult your tax advisor for specific details.
However, for the property you hold for investment and which qualfiies for capital gains tax treatment, you need to refer to the IRS rules that define your holding period. According to the IRS, the first day of your holding period is the day AFTER settlement. When you sell, the settlement date is the last day of your holding period.
For long term capital gains, your holding period needs to be at least one year and a day. Buy on Jan10, and sell on Jan 10 next year, you fall one day short of long term capital gains tax treatment.
Get clarification on this.
I was bitten by the expense v.s capitalize rule.
The "expert" I consulted, said "well, I guess I could make a case for doing it this way"
I also, ask a trust "expert" atty, about setting up a certain trust, she kept getting hung up on who was funding the trust.
I went to another atty.
How is your LLC treated for tax purposes?
If it is a single member LLC treated as a disregarded entity, then claim all your rental income and expenses (including mortage interest) on Schedule E as if the LLC did not exist.
If your LLC is a partnership or corporation, then claim all the rental expenses actually paid by the LLC as business expenses including the mortgage interest. No need for you to disregard the mortgage interest expense deduction just because the loan was issued to you personally.
If the accountant objects, just bring out your LLC corporate documents and show him that one of the first resolutions passed by your LLC was to assume the loans on the rental property retroactive to the date the LLC acquired title..[ Edited by NewKidInTown3 on Date 04/07/2009 ]
Seller concessions are included in the Cost of Goods Sold on your Schedule C.
Go to www.financialstability.gov and click on the home affordable link it will give you all the details of the programs. None are mandatory for the lenders all optional with incentives for them.