Flipping/Capital Gains Tax - Posted by Todd Anderson

Posted by Todd Anderson on May 09, 2000 at 01:51:12:

Thanks Michael. I forgot all about there being long term and short term.


Flipping/Capital Gains Tax - Posted by Todd Anderson

Posted by Todd Anderson on May 07, 2000 at 21:59:03:

I was talking with a Realtor just the other day, (she had a great 4 unit I missed) and I was telling her that I would rather buy, fix, and sell instead of buy and hold. I’d like
to make some faster cash. She mentioned that you would pay capital gains tax on all of those sales. Am I right in assuming that if you flip a property, without ever taking
title to it, that capital gains would not come into it? And if so, wouldn’t it be much more profitable to do this instead of buying, taking title, fixing and then selling?

Re: Flipping/Capital Gains Tax - Posted by Michael Morrongiello

Posted by Michael Morrongiello on May 07, 2000 at 22:41:44:

I am no tax expert but it is may understanding that Essentally there are (2) two types of Captial Gains taxes;

  1. SHORT TERM - an asset is only owned for 12 months or less. When it is sold the short term gains are considered ordinary income and taxed at your normal tax rates

  2. LONG TERM - An asset is own for more than 1 year then you are looking at this type of sale to have long term capital gains tax treatment (typically 20%).

If you are “Flipping” short term whether or not you take title to the property is immaterial, you would be taxed on any “profit” as if it were ordinary income. Now there are ways to offset some of this income. eg. you do business in a corporate name, then all of the expenses and earned income of the corporation come into play as to whether or not you made a profit.Profits would then be taxed at the corporate tax rate.

Michael Morrongiello