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35% tax vs. 15% tax? selling a home. Advice?

Posted on: Thu, 10/29/2009 - 05:20
35% tax vs. 15% tax? selling a home. Advice?

If a home is purchased to rehab and then flipped,Do you get taxed 35% on your selling price if you resell in before a year? and do you only get taxed 15% if you "hold" and sell it after a year? What part actually gets taxed? the full selling price or just the profit you stand to make? thanks

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Posted on: Mon, 11/02/2009 - 23:04 #1
djmss,

You profit from the sale is the portion that gets taxed. The cost of the property and the improvements is considered "your tax basis" in the property. The profit you may will be taxed atr your related tax rate. If the home is a primary residence and you lived there for 2 of the past 5 years there are exemptions from the tax. However, you always have to prove residence and risk an audit for any unsupported documentation.

The tax rate may vary depending on your current situation. The IRS Tax code for capital gains and losses may be of more assistance to you. The following is a link to that information on the IRS website:

http://www.irs.gov/taxtopics/tc409.html

I hope this helps. Good luck with real estate investing. Believe and Achieve! Smiling - Joe

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