Taxes, W2s, and Deal Anaylsis

[Jeremy Host]

For those of you out there in the BP world that are doing flips and still have a W2 job. Are you projecting the income tax and self employment tax as part of your projections in each individual analysis or are you worrying about that at tax time and not projecting that in the net profit?

When running an analysis I am including these two, income tax per my tax bracket, and 15% for self employment tax. When I factor these in, it makes deals look a lot less attractive.

I also believe you pay self employment tax up to a certain percentage and also income tax is kind of a sliding scale as well.

Feels like maybe I am over analyzing?

[Linda Weygant]

Quote from @Jon Fletcher:

Further to what @Allan Smith said, don't forget that real estate has excellent tax deferment strategies for house flippers, such as 1031 exchange, etc. Don't drive yourself crazy with tax analysis on profits, just find a CPA. 

 Flipping is not eligible for 1031 exchanges