For question 1, the self-employment tax kicks in if you do more than a couple of deals a year. If you get started soon, you could likely get away with just treating a deal or two in 2003 as short-term capital gains. You’ll need to talk to an accountant to determine what the exact number is.
From then on, the self-employment tax is around 15%. (There is a max on this, so if your salary plus Lonnie earnings surpass this, the rest is exempt from the 15%).
There are a lot of variables, but I’d say 45% is good if you want a single figure.
A couple of questions about taxes - Posted by Gregory
Posted by Gregory on October 23, 2003 at 09:57:59:
I have a few questions about taxes that I hope some of the more experienced investors can shed some light on.
Generally speaking, how much should I figure I’ll be paying out in taxes? I figure I’d be paying Federal and State taxes; will I also be paying Self-Employment tax even though I will still be keeping my job? Currently I’m figuring 45% taxes overall in my spreadsheet, is that too high, too low, or just about right?
Selling notes and taxes: Let’s say I purchase a MH and have $3,500 into it when I sell for $8,000. I take $1,200 down and create a note for $6,800. This makes my taxable revenue (8000-3500) $4,500. Now, let’s say I sell that note as soon as I create it for $6,000, would that reduce my tax base any? Wouldn’t that effectively reduce my revenue by $800, thereby reducing my tax base to (8000-3500-800) $3,700?
