House flip and taxes

**Newcomer** · 11-13-2009, 04:36 AM

Hi.

First of all I am not From America so excuse me for my bad English.

I have a few questions about house flipping and taxes.

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If someone decide to buy a house,renovate it within two weeks and sell it within the month.

Lets say that the house original cost is 100,000.After renovations its value is 200,000.

now lets say that that someone is renovating one house a month.

If the transaction is made and the house is sold for 200,000 how much money goes to government.

((((((If I sell more than 3 houses a year its considered a business.That means I pay 35%(for short term)+15%(becouse it is a business).That means that I have to pay 50% of my income.

So,if I buy a house for 100,renovate it for 40 and sell it for 200.Half of it(100,000) goes to IRS)))).

I need answers quickly and once again sorry for my English.Let me know mistakes I made.

**Greg** · 11-13-2009, 05:10 AM

You really need to talk to a tax specialist, especially since you are not a citizen, but one mistake I saw in your calculations was:

"So,if I buy a house for 100,renovate it for 40 and sell it for 200.Half of it(100,000) goes to IRS))))."

If you buy it for 100k and spend 40K to fix it up then your profit will only be 60K. The IRS only taxes profit so whatever tax rate applies to you will only be applied to the 60K profit.

There could be other local taxes and expenses involved, so don't rush into anything without expert help.

**Newcomer** · 11-13-2009, 06:42 AM

Originally Posted by Greg

You really need to talk to a tax specialist, especially since you are not a citizen, but one mistake I saw in your calculations was:

"So,if I buy a house for 100,renovate it for 40 and sell it for 200.Half of it(100,000) goes to IRS))))."

If you buy it for 100k and spend 40K to fix it up then your profit will only be 60K. The IRS only taxes profit so whatever tax rate applies to you will only be applied to the 60K profit.

There could be other local taxes and expenses involved, so don't rush into anything without expert help.

Thank you very much.

**Michelearray** · 11-30-2009, 05:34 AM

When starting a wholesaling business there are a lot of wholesaling and house flipping costs. Not only will you be in charge of finding leads, finding the buyers, bringing them together, working with the title company and even dealing with contracts, you'll also be covering costs until and when that house sells.

**Jorge** · 12-02-2009, 03:59 PM

It all really depends...

If you just set out to invest without structuring yourself yes you'll pay a lot of taxes but a good tax accountant will tell you what to do to reduce your tax liability down to almost zero (legally).