Good evening BP, What percentage of your cash flow do you save for tax purposes?

@Daniel Mendez Save as much as possible not just for taxes, but so you can invest in another property.

@Daniel MendezHaving a buy and hold investment property can reduce your taxable income resulting in less tax liability. This would not require you to save for taxes.Having a flip - There many taxes to consider from federal income tax, state income tax and self-employment tax. Everyone is going to be in a different bracket so its best to look at your prior year marginal tax rate to give you a good sense of what you should be holding for taxes.

@Daniel Mendez You are not taxed on cash flow, but on taxable income, which takes in consideration depreciation expense, but does not include any principal payments on debt. Also, your tax rate depends upon your other taxable income sources. With that being said, if your cash flow is from rehabs, then most likely you don't have much depreciation to consider and you should set aside around 1/3 for Federal tax plus the tax rate for your state. If you are a landlord, then you may not have any taxable income even though you have positive cash flow. But if you are generating taxable income, then you may want to set aside 1/4 of net rental income plus the tax rate for your state. These figures are conservative and work for ballpark numbers. You should discuss this with your CPA to determine what percentage you should use based on your specific tax situation.

Cash Flow: How much should I save?Cash Flow: How much should I save?

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Cash Flow: How much should I save?

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