1031/dealer
So my question is what is the differene in the tax rates and if its a fix and flip are you allowed to write off the repairs pre -tax. The reason I ask is I just picked up a property that has 45k equity . after fix up it will sell for around 130 and I paid 55. I want to use this to move on to bigger and better things. I see that as investment. But I know the IRS often see things different than we would like them to. Any sugestions as to the best way to handel this property.
Quote:So my question is what is the differene in the tax rates and if its a fix and flip are you allowed to write off the repairs pre -tax.If it is a fix and flip, your tax rate is the same as your ordinary income tax rate and your self-employment income tax is an additional 15.3%. Your rehab costs are added to your basis before computing your taxable gain.
You don't say what you are comparing this strategy to, so I can't comment on any differences in tax treatments.
It appears to be a fix and flip. Although it is an investment, it is not HELD for Investment, but rather held for sale, so a 1031 exchange would not apply.
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