Lets say I made 20k on a flipp. What am I looking at for taxes? How does it all work. I would like to do a flip but I want to factor in the taxes I would have to pay.
Thanks
auggflo
It depends…short term REI profits will be taxed as normal income. So, it depends on your other income/deductions and what tax bracket you are in.
Keith
I will talk to my tax man to see what he has to say. When I do, should I be looking for a % to use for every deal or would I have to chat with him for every deal?
Thanks
auggflo
Again…“depends”…do you have a “real job”? Do you know what the tax brackets are? Do you know which you’re in? You can do a SWAG by looking at what you made/paid last year and moving up the income list and seeing what effect it will have on the tax…
Keith
Warning on short term gains.
The flip profit is ADDED to your regular income and then ALL your income is taxed at the appropriate rate. So if your flip money plus your income puts you in a higher tax bracket you pay the higher tax on all your income. People mistakenly think just the flip money is taxed at a higher income.
My wonderfull accountant reviewed my last years tax return and told me exactly how much I could earn before I made it to the next level. That’s good info.
Jeff
Jeff, Hope you are not paying your accountant too much becuase he is telling you wrong (or you misunderstood) him. Tax rate is incremental.
check it out here…
That’s kinda what Jeff said…he said the accountant told him how much more he could make until he’s at the next increment…
Keith
Ah Keith, you got my back. Thanks.
I did word the sentence wrong but I see you understood the intent.
Is 70 % of something still better than 100% of nothing?
A 5 k profit can get chewed up but 20k after taxes should still get the family to Disneyworld.