Capital Gains Tax Inquiry

[Daniel Black]

Hi everyone,

I am very new to real estate, in fact, I haven't even begun yet. I have been a BiggerPockets fan for years! I listen to the podcast and attend the weekly webinars in order to learn as much as possible.

SO! I potentially am going to have my first deal lined up, it is a condo that is ironically next door to my parents.

I am an Assistant Superintendent for a fairly large General Contractor in the Boston area as my day job and am graduating with my Bachelors in Project Management. The project management portion of this potential deal I am very confident that I have that under control.

My biggest concern is my lack of expertise in the real estate transaction itself and also more importantly Capital Gains tax if I were to flip it. I would like to get some input on any suggestions on how to avoid or minimize this tax. I get the general concept, I just would want to know if it would affect me.

The purchasing price of the condo is $90,000....Rehab is estimated for $20k-$25K and the ARV should be around $155K-$175K. I would plan on rehabbing it and selling it within a year. What are the implications I would run into with the capital gains tax and I guess my biggest question is "What am I missing".

Am I over-analyzing capital gains??

I look forward to hearing from all of you!

Thanks,

DJ

[Ashish Acharya]

Originally posted by @Daniel Black:

Hi everyone,

I am very new to real estate, in fact, I haven't even begun yet. I have been a BiggerPockets fan for years! I listen to the podcast and attend the weekly webinars in order to learn as much as possible.

SO! I potentially am going to have my first deal lined up, it is a condo that is ironically next door to my parents.

I am an Assistant Superintendent for a fairly large General Contractor in the Boston area as my day job and am graduating with my Bachelors in Project Management. The project management portion of this potential deal I am very confident that I have that under control.

My biggest concern is my lack of expertise in the real estate transaction itself and also more importantly Capital Gains tax if I were to flip it. I would like to get some input on any suggestions on how to avoid or minimize this tax. I get the general concept, I just would want to know if it would affect me.

The purchasing price of the condo is $90,000....Rehab is estimated for $20k-$25K and the ARV should be around $155K-$175K. I would plan on rehabbing it and selling it within a year. What are the implications I would run into with the capital gains tax and I guess my biggest question is "What am I missing".

Am I over-analyzing capital gains??

I look forward to hearing from all of you!

Thanks,

DJ

 There is no capital gain tax when you are flipping it. It’s an ordinary income tax and also self employment taxes if you plan to do this again and again. 
 Might be able to avoid SE tax on the first one if executed properly.