We started our real estate investment journey July 2014. Our first deal we negotiated a property under contract for 18000. We wholesaled it for 30000. After closing cost we netted 10500. This will be our first year to file taxes for our business. We plan to sit down with a CPA to analyze what we owe and walk us through our first tax season. On our first deal, what amount of taxes will we owe? I am trying to get a grasp of how it works.
It's ordinary income, at normal income tax rates, plus 15.3% (both sides) of Soc sec/med. unless you're taxed as a sub s, and already have a reasonable salary subject to the soc sec/med.
@Wayne Brooks Thank you for your response! My partner and I will be filing our personal and business taxes separately. So similar to my personal tax return, we will pay taxes on our business income depending on which tax bracket we fall in correct?