Question On Profits
Hi All
I have a question regarding profits you make at a closing .. example if i closed on a deal and profit at closing lets say 30k .. what would be my tax on that money.. isnt this considered capital gain tax ?
Anyone know what is the tax on the profit please respond..
eliteprops
Sure you have to pay capital gains on this money. The trick is to have enough tax write-off to off-set the tax. Your mileage to and from investment property, repairs, painting, property management, cell phones, property tax, business meals, lawn maintenance, bad debt, closing cost, points, well you get the picture.
Thank you Vern
Yes I get the picture.. thanks again
You really need to provide a little more detail here about what you are selling and how you used the property, and how long you held it before anyone can give you a specific answer.
If the property you are selling is your primary residence then (1) all of your 30K profit is tax free if you owned and occupied the property for two of the five years prior to the sale, or, (2) your profit is subject to a maximum 20% capital gains tax rate if you held the property at least 12 months, but less than two years, or, (3) your profit is taxable at your ordinary income tax rate if your holding period is less than 12 months.
If the property in question is investment property (such as rental property), then in addition to the applicable capital gains taxes, a 25% depreciation recapture tax rate is in play.
If the property in question is a "flipper", then all of your profit is taxed at your ordinary income tax rate. If you are in the 27.5% tax bracket, then your profit on the deal is taxed at the 27.5% rate.
Does this help?
DaveT,
I have went back and read your posts and responses to some articles here at TCI, it is a real pleasure to have you here.
You have given some great advice on taxes to help all of us. Please keep on posting. Your posts are beneficial to all of us.
John $Cash$ Locke
It is not how much you make but how much you get to keep out of a deal that matters.
Thanks for the kind words John. I don't post often since I am only well versed in a couple of areas. I do enjoy your posts especially, and the repartee you have with Michaela.
Still on the sidelines with my first Subject to deal. I thank you for your assistance in the forums on this topic, and look forward to your continued support to this site.
DaveT,
Someday I am going to meet that girl.
We enjoy breaking up the seriousness sometimes with a little humor.
Keep rolling with the 'Subject To' method and pretty soon you will be telling the posters how it is done. Then I can just sit back and watch. Of course I can then say I remember DaveT when he first got started, now look at him go.
John $Cash$ Locke
What about subject2:
1. your buyers downpayment
2. what about any backend money
Tonyy,
What is your question, or to paraphrase "The Sopranos", Whataboutit?