Tax Rates on Flips

[Forza]

Say you do a SFH development/rehab then flip it (in the US). What is the total tax that you pay on the profit? E.g. If you have sales tax and income tax it would end up looking like 40% was deducted from the profit (not including general administrative business expenses such as accountant fees).

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Mental Rental]

Profits from real estate sales are taxed as capital gains, provided it's not your primary business.
If it's your primary business, watch out, because you'll be subject to self-employment tax, which can basically double your tax bill to Uncle Sam.
Happy investing,

_______________________
Junior
Lease Agreement

 

[Forza]

Does this mean any developer, like Donald Trump, pays in excess of 50% taxes on net profit?

 

[hakrjak]

Short term flips are taxes as short-term capital gains, which is going to be at the same rate as earned income.

Structure yourself as an S-Corp or an LLC, and don't pay yourself all of the income immediately -- and you can shield yourself from some of the immediate obligation. Pay yourself dividends over time, etc.

Cheers,

- Hakrjak

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[vulture4856]

Tax rates may also affected by the global recession we currently experiencing today.

 

[hatterasguy]

It really depends on how much you make. Talk to your accountant he will tell you what you need to set up when to minimize your tax burden.