Posted by craig on January 13, 2004 at 09:03:20:
Im not sure, but on a profit like that it seems you should be making twice that much. What kind of loan was it? If it was hard money, points and interest could have eaten up a lot of the profit. I would ask your broker.
tax on rehab profits??? - Posted by steve (CA)
Posted by steve (CA) on January 12, 2004 at 23:20:23:
my first deal just closed. i went partners with someone with the front money. they purchased a home and i rehabbed it. bought for 91,000. sold for 145,000. rehab costs of 28,000. now, my question is, what would ballpark closing costs and fees come to? also, how would this be taxed? (the house was vacant btw) i am just wondering because apparently my half is 7500 for a very extensive rehab (over 400 hours personal labor). i’m just wondering what went wrong.
Re: tax on rehab profits??? - Posted by E.Eka
Posted by E.Eka on January 13, 2004 at 16:04:23:
You under budgeted. You thought it would cost less to rehab then it did. Also, rather then spending 400 hours at $18.75/hour, you could have spent some of your time getting new deals and out sourcing the rehab to others. It’s your first deal and you came out on top, which is good. So now you learned a little bit about what you need to do. Also next time try and get the house for a LESS as possible.
Re: tax on rehab profits??? - Posted by Todd B (Va)
Posted by Todd B (Va) on January 13, 2004 at 11:56:45:
You paid too much for the property. Your effective rehab cost is more like 40k(28k plus the value of 400 hours labor)
ARV x .7 minus cost of repairs formula
145k x .7 = 103k. 103k minus 40k = 63k
91k minus 63k = 28k
You overpaid by 28k.
Todd B (Va)
Re: tax on rehab profits??? - Posted by Stew(NE)
Posted by Stew(NE) on January 13, 2004 at 10:56:23:
Did you get a copy of the HUD Form 1? (Or whatever closing document they use in California) It should show the breakout of all the fees and what the total profit was.