How much tax to keep put with money back deal

General Real Estate Investing
1

Hello,

I have a question about the taxes that must be paid on a money back deal. 1st deal done with $ 60,000 back at closing. I am not sure how much to keep out for taxes. I have been told 15 up to 30% in the state of TN.

I do plan on getting an accountant/ tax advisor, but the deal is done and need to figure out what % for taxes.

Thanks for any advice.

2

Howdy Surgerygrl:

How exactually did you get cash at closing? If you borrowed more than you needed the loan proceeds are not taxable but only a loan that will need to be repaid. Once you sell the property you may have to pay taxes but not until then.

If you sold the property and made a profit then you will pay either capital gains or ordinary income tax. You should be able to figure the taxes due using a tax table to get an estimate.

3

have you considered 1031 ?

4

sniper,

SURGERYGRL’s deal is a purchase with cash back at closing. A 1031 is appropriate when you are the seller of an investment property.

5

sorry, didn’t pay attention :-[
BTW, Dave, are you from MD? 8)