New to Wholesaling looking for information on double closing

[Ashley Mccampbell]

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[Michael Plaks]

Quote from @Jim Pellerin:

The wholesaler will be subject to capital gains instead of earned income. 

Jim, I would not have singled you out if not for you describing yourself as a real estate coach. In this capacity, giving an inaccurate tax advice can be dangerous for your students.

Double closing is not taxed as capital gains. It is ordinary business income. The rates are the same, by the way, so it's more of a technicality distinction, but is still important for the correct reporting schedule. It goes on Schedule C, not on Schedule D.

A related and much more subtle issue is whether the wholesaler owes self-employment taxes, in addition to the income tax. It pulls us into a potentially complicated discussion of whether he is doing enough to qualify as "a trade or business" - and for most wholesalers, the answer is yes. The answer does not change whether he is getting a straight assignment fee or double-closes.