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When do I pay taxes for a flip?
I want to know when I will pay taxes if I do a flip?
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Michael Plaks
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Michael Plaks
#1 Tax, SDIRAs & Cost Segregation Contributor
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#1 Tax, SDIRAs & Cost Segregation Contributor
- Tax Accountant / Enrolled Agent
- Houston, TX
You do not pay taxes on a flip. You pay taxes on your total annual results of income minus expenses.
Example:
1st flip - lost $20k after all expenses are counted, and the dust settled (95% of new investors lose money on their first flip)
2nd flip - broke even
3rd flip - made $50k
overhead expenses for the year, such as marketing, training and driving: $25k
The following spring, you will owe taxes on -$20k +$0 +$50k - $25k = $5k