Tax Reporting for Flipping Houses
The major problem with doing taxes for yourself is that you don't know the tax laws. You may think you made $5,000 but that is only the gross income before taxes. Many businesses have problems with paying taxes because it destroys the bottom line but they must be paid. There are two basic classifications you can place house flipping into; the first of which are self employed taxes and short term capital gain. You would rather be placed in the short term capital game section because you pay fewer taxes. If you're self employed, you have to start paying as much taxes as a business. To figure out how you fit, you have to look at a few elements. Firstly, you need to see how long the land is kept. Also, you have to keep track of how many transactions you make. Because they will all be real estate transactions, you will probably be placed in the self employed section.
You may think you don't have to worry about taxes because you have not been audited and figure you never will be but with all the house flipping commercials on television, the IRS will start looking into real estate people to increase revenue.
Some of the people flipping houses can earn anywhere from $50,000-$150,000 from a single transaction. I predict the IRS will start monitoring this market more closely foreseeing regular people being unaware of tax laws.
Related Tags: estate, house, real, tax, taxes, flip, reporting
George Christodoulou,
If you have any questions about tax reporting for flipping houses,
please visit, http://houseflipblog.com for more information.
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