OfflineI have just completed my first rehab project where I made 30,000 and my mentor has tried to explain to me the short term capital gain tax ramifications that I will receive as a result of this. It is all clear as mud to me because I have never done my own taxes yet. (I am only 22) He said I could face up to 50% taxation on the profit, which is unbelievable to me. He also presented the idea of a 1031 exchange but I do not have another deal lined up just yet. Do you seasoned rehabbers have any way around this or any solutions to offer?
__________________
Hi Derek, taxes are unavoidable. They may be postponed but ultimately unavoidable. Get some professional advice from an accountant. You will still pay taxes but you only pay what is required. The accountant/ tax professional can assist you with the 1031 tax exchange. You do have a limited time to reinvest your profit from the previous sale to defer the taxes. A tax advisor/ accountant will be an important part of your power team.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
Are there any tax benefits from opening a LLC? I have been thinking about that for a while now.