Taxes On Flipping Pre-const
I bought a house in pre-construction phase, It will be completed by Mar05 and now the same houses are going for 70k more than i bought, If i sell it and take the 70k out how much should i pay in taxes assuming the closing is simultaneous.
Also i recently changed my employer so can i get any exemption on taxes if i say i sold my house because of change in my employment. ..
At the moment, you have an investment property under construction. If you flip, the profit will be taxed at the same rate as your other ordinary income. What is your tax bracket? The answer is the tax rate that will be applied to your profit.
The change of employment you refer to only applies when you sell your primary residence. You are not selling your primary residence, so the change of employment rules do not come into play.
Even if you do the arithmetic on the partial capital gains exclusion, the forumula give you a prorated exemption for the actual period of time you actually occupy the property as your primary residence. With your plan to simultaneously flip, your occupancy will be zero days, so consequently your partial exemption will be zero. The rest of your profit will be taxed at your ordinary income tax rate.
Thanks for your reply, My tax bracket is 25%
I dont have a primary residence so i can put this home as my primary residence, but even if i wait for a buyer i can only show 2 mons as my primary residence.
So will the profit taxed at 25%, or 28%(when i combine the salary and profit i go to next tax bracket)
you need to open a company ASAP and set up a retirement account.
you can fund it upto 40k if you do it right. if married, you can deduct
another 40k for her.(actually to fund it 40k u might need to make
over 200k. but worst case you can put in 15k per spouse)
from the remaing 30k you can deduct expenses, so maybe you'll
end up paying tax on 15-20k.
hire a qualified cpa or tax attorney. the few thousand you spend will be well spent.