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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29522
Experience:  Taxes, Immigration, Labor Relations
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Thinking of buying a property to flip, never done this before. I plan on repairing and upg

Customer Question

thinking of buying a property to flip, never done this before. I plan on repairing and upgrading it and selling it in 2-3 months.
Located in PA, single family home for $175,000 market value after $50,000 in repairs is $285,000
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
Hi and welcome to our site!Based on your information - that transaction will result short term capital gain (for the property held less than a year) $285k (expected selling price) MINUS $225k (adjusted basis = purchase price + improvements) MINUS ~$10,000 (selling expenses) = ~$50kPlease be aware if you will start doing that activity as a business - that income would be self-employment income - subject to both - income and self-employment tax.Your actual tax liability will be based on your total income, filing status, deductions etc.
Customer: replied 1 year ago.
what is the $10,000 you listed for? and is short term capitol gain tax placed on my tax bracket or something different
Expert:  Lev replied 1 year ago.
I just assumed some possible selling expenses - realtor's fees, utilities while the property is listed for sale, inspection costs, etc.
Your actual selling expenses might be more or less than that amount.
Here is just a very rough estimate.
Short term capital gain is taxed at your regular tax rate.
Customer: replied 1 year ago.
what is the $10,000 you listed for? and is short term capitol gain tax placed on my tax bracket or something differentthanks
Expert:  Lev replied 1 year ago.
In the above estimations - short term capital gain is expected ~$50k
.
the $10,000 you listed for assumed selling expenses - realtor's fees, utilities while the property is listed for sale, inspection costs, etc. That is just a very rough estimate.
Short term capital gain is taxed at your regular tax rate - based on your total income, filing status, deductions etc.

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