Hi I recently relocated from England to Massachuetts so I am a little unfamiliar with US Laws,
I am looking to buy forclosures but keep hearing that the name of the game is to flip them fast, yet I also hear that uncle Sam will be egarly wait for his cut each time, can anyone tell me how (%) much this is likely to be?
Thanking you in advance, James
Depends on how much you make. You can safely assume it will be around 28% or higher. If you hold properties for at least an year than the tax will come down to 15% (capital gain tax).
Isn’t this a major advantage of the lease option? You don’t officially sell until after you’ve owned it for 2-3 years. Then you can either pay the lower capital gains or use a 1031 to not pay any capital gains and invest in another rental property? My understanding of 1031 is you need to own it for at least 2 years.
You can lease a place for an year and then sell it. As for 1031, it is a different animal, you have to show your intent when you acquiring the property and when you sell the property, third party has access to the funds and you have to tell them what to do with the funds, like buying another property or have cash after taxes.
From my understanding. if your looking to avoid capital gains taxing, you could set up a LLC and have it taxed as a S-corp. if you are looking to do flips and expect to turn a profit within months that most do this is a way that you can go without having to hold it for more than a couple years
Thank you to all who replied I appriciate your time and advice
James 