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Thinking of buying a property to flip, never done this before. I plan on repairing and upg

Customer Question
rading it and selling it...
thinking of buying a property to flip, never done this before. I plan on repairing and upg rading 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: 2 years ago.Category: Tax
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6/15/2015
Tax Professional: Lev, Tax Advisor replied 2 years ago
Lev
Lev, Tax Advisor
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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.
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Customer reply replied 2 years ago
what is the $10,000 you listed for? and is short term capitol gain tax placed on my tax bracket or something different
Tax Professional: Lev, Tax Advisor replied 2 years 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.
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Customer reply replied 2 years ago
what is the $10,000 you listed for? and is short term capitol gain tax placed on my tax bracket or something differentthanks
Tax Professional: Lev, Tax Advisor replied 2 years 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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Lev
Lev
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