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Updated almost 9 years ago on . Most recent reply

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Rudy Manna
  • Investor
  • Redmond, WA
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Saving on Sales Taxes during rehab

Rudy Manna
  • Investor
  • Redmond, WA
Posted

I am doing couple of rehabs and wanted to bounce some ideas on possible ways of savings on taxes (legally). I have never put too much thought on taxes but with sales tax, and income taxes later, it can be substantial. I understand that this has been discussed in details in other threads but will love to hear some real life experience and perspectives. 

- I can deduct the sales tax on home improvements during my tax. Does this applies to investment properties?

- Can I do a 50/50 JV with a GC, and that way I can possibly avoid sales tax for the services rendered by GC and his mark-up. We can structure in such a way that his services will be his contribution to the project, hence sales tax wont be necessary.

- I am from Washington, so buy supplies in neighboring Oregon that don't have sales  tax. Or taking advantage of their sales holiday.

Any other thoughts?

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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
Replied

Unless WA is strange, you're not paying sales tax on a GC's services/labor.  He pays sales tax when he buys the material, that gets passed along, and there's no way to avoid it. Focus on more important things to save/make money.

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