Paying Taxes On My First Rahab/flip
Hopefully someone can help me get a general idea on how much tax I will have to pay on the deal. This is a rehab property.
Purchased - 62K
Rehab Cost - 23K
Total Cost - 90K
Selling for 115K
Profit 25K
I held the property for 6 months.
What kind of taxes am I looking at having to pay? Will I pay them next year when filing? Or should I pay them now.....Is there a penalty for paying them when filing next year? Thanks for any help.
You will have to pay short-term capital gains tax since you held the property for less than one year. The amount of tax is dependent upon the ta x bracket you are in. If you are in the 25% tax bracket, the gain will be taxed as ordinary income and you will be approx. $6250 in federal tax + state tax if you live in a state that has state income tax.
+ self employment taxes