Real Estate Tax Law!

5 Replies

Rehab costs are always an expense regardless of what type of entity owns the property.

Originally posted by @Andrew Santana :

@Russell Brazil thanks for the response. How much? Could all of it be written off?

 All of it.  Any business that sells a product...whether thats houses, cell phones, cogs, anything its going to be the same thing.

Sales price, minus sales costs, minus your other associated costs like rehab, minus your purchase price and acquisition costs will then leave you with your profit. Then your profit is just like any other ordinary income, and is taxed.  Remember as a flipper, that is self employed income, so you also have self employment taxes as well as normal income taxes.

@Russell Brazil is only kind of right. 

If you're doing a rehab on a flip those expenses get capitalized until the flip is sold. 

They're expensed when it's sold- if for example you buy a property in October, put in $50k then it doesn't sell until February of the next year

You don't just get to deduct $50k in year one, you deduct it against the income in year 2. 

Neither the entity, nor the new tax laws impacted that in any way.