I just completed my very first deal. A $70,000 home that I flipped for $23,000. I made a nice little $5,000 profit on this trasaction.
Now, I have some credit card debt that I would like to pay down without having to be taxed for the full $5,000.
For example, I have approximately $1,500 in on my CC. Is there a way I could pay that and only be taxed for the balance of $3,500?
Joel
Joel,
I wouldn’t recommend that. You are better off paying the taxes on the 5k. Our see an accountant and they will help you with expenses, etc…
IRS doesn’t care how you use your proceeds as long as you also pay the taxes. . .all of them. . .that are due. The good news is that you made a profit. The bad news is that IRS wants its full share. (I used to work for the IRS.)
Paying the credit card won’t reduce your taxes. The interest on the credit card may or may not be deductible (or a bit of each), depending on what the credit card was used for.
John Hyre