Flipping taxes

3 Replies

If I am in a partnership where my partner owns and supplies the house and I supply the renovation budget. We we flip the house, what kind of taxes would I be looking at since I never owned a home?

First it looks like you may not have the best partnership structure because you do not own part of the home.  That being said it probably does not matter for tax purposes on a flip.  The income from a flip is normally taxed as regular income, not capital gains.  You may also have to pay self employment tax.

You really need a tax professional to help you this out.

If you are going to do owner financing it really gets crazy.

Anyway... get a CPA and start early on the planning.

Thanks for you response Michael. So you would recommend I find a way to get my name on the house then? Also, what do you mean when you say that it gets crazy when you do owner financing?

@Cody Cox   Read this to start with this...

http://www.creonline.com/irs-definitions-real-estate-investors-part-1.html

I also did not mention the Real Estate Professional designation ("loophole").

You can search for other threads about what kinds of partnership arrangements should be used.

Before you do that, I would suggest that you and your partner both get good tax advice.