How to account for flip gross profit

4 Replies

Hi Folks, I have a master spreadsheet with all my costs for a flip. I'm confused though as to how to calculate my gross profit. 

I have considered any and every expense associated with the project, including credit card/paypal fee's, credit card interest payments, travel expenses. Also, my parents who partnered with me ended up living there for 8 months and paid me rent, so I have two values, one gross profit for the project including their payments as "investments" and another without their payments looking at the actual project costs. In addition I paid my parents a contractor management fee which I do include in the costs.

Now I know for tax purposes they will not include my personal travel (I already deducted that as on my sched C), I know none of the CC interest or fee's would be deductible anywhere, but regardless I plan to include them on the gross. 

In addition, how do you break down expenses categorically so that you can analyze best? I have a ton of Home Depot and Lowe's receipts that I have no idea if the materials are paint or cabinets etc. Is there any product out there that can ingest receipts and lookup item codes to itemize them? 

I also plan to categorize out the following as best I can: 

  • materials
  • contract labor
  • holding costs (mortgage, utilities, hoa, etc)
  • investor costs (travel)
  • money costs
  • closing costs (purchase)
  • closing costs (sale

@Leland Smith , Everyone has their own way to track and analyze deals. 

Credit card fee would be deductible if it was related to flip. Make sure you talk to your tax professional. 

I use these criteria to analyze my deals. 

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Hope that helps. 

@Ashish Acharya - thanks for sharing, that's pretty useful format. What is the -85k for? Must be a particular deal you analyzed? Good reminder about the 20% pass through deduction, I'll have to remember that for my CPA.

@Ashish Acharya - got it. I definitely need to create a spreadsheet that more formal looking as well. Will reference this one for pointers and format what I have as well. Thanks.