Tax On Gains
New to the process and have a couple of quick questions:
1) What is the tax rate you pay on the net gain of the investment?
2) How much money would you say is a minimum to play the market?
3) It seems that at the auction the properties get bid down to low interest rates, does this mean the best tactic is to wait until after the auction?
Thanks for input :-D
For long term capital gains for most investors is 15%. Unless there has been a change, this rate will be in effect until 2009 when it returns to 20%. There is one caveat. The component of the gain that is due to depreciation is taxed at 25%.
I don't think that you want to "play" the market in real estate. The amount of money you need will depend upon what you want to do. Conversely, what you are able to do will depend on how much money you have. You might look at some of the forums to see what might suit your situation.
I am not sure what you mean by "properties get bid down to low interest rates". Of the choices of preforeclosure, foreclosure or bank REOs, my preferences are preforeclosures and bank REOs. You have a much greater opportunity to do due dilligence on the property and you won't get caught up in the heat of the bidding.
seal the deal--(MO)-----------------
1--this depends upon whether the property is held for long term investment, in which case the other post tells you. However, if you resell quickly or that is your intent, it is ordinary income, not long term capital gain, so it is taxed at your ordinary income tax rate.
2--You can start investing in tax liens for about $100, if you live in a state that has tax liens. If you want to work hard, you can buy some properties with absolutely no money.
3--I don't know. There is no "best" tactic. Every situation is different. You might try talking to owners before the auction, you might talk to them after the auction. Depends.
Good Investing**********Ron Starr***********
As the forum is tax liens I am assuming you are talking about tax liens and not property auctions.
I take it you are looking at a state where the interested parties bid down the interest rates to obtain the tax lien. This is not the case in all states.
The liens available after an auction will be at the rate set by the county/state. The liens available will be the ones that were picked over.
John
Quote:
On 2004-11-07 11:47, sealthedeal wrote:
New to the process and have a couple of quick questions:
3) It seems that at the auction the properties get bid down to low interest rates, does this mean the best tactic is to wait until after the auction?
Thanks for input :-D
[addsig]
seal the deal--(MO)-----------------
1--this depends upon whether the property is held for long term investment, in which case the other post tells you. However, if you resell quickly or that is your intent, it is ordinary income, not long term capital gain, so it is taxed at your ordinary income tax rate.
2--You can start investing in tax liens for about $100, if you live in a state that has tax liens. If you want to work hard, you can buy some properties with absolutely no money.
3--I don't know. There is no "best" tactic. Every situation is different. You might try talking to owners before the auction, you might talk to them after the auction. Depends.
Good Investing**********Ron Starr***********