Hey everyone. I'm new to BiggerPockets and something that has caught my attention is wholesaling. While poking around in some of the forums, I came across this: here. Which showcases the tax implications of doing wholesaling. But I would like to hear everyones opinion on some tax strategies you could implement to reduce your taxable income.
Almost certain any margin you make will be treated like ordinary income. Not a CPA, but what you buy (or don't) is inventory and not an investment.
There's nothing special with regard to wholesaling than any other service or commission based business. There are many various strategies that small business owners can use to legitimately and legally reduce their taxes including, but not limited to:
* retirement plan maximizing (up to $57,000/year in some cases)
* home office
* business use of personal vehicle
* Section 105 plans
* Other accountable/reimbursable plans for employees
* Possible hiring of your own children (based on value provided, not because they're you're children)
and many, many more. Get wth a competent small business tax advisor or any of the real estate focused tax pros here on the forums to discuss which options might be available to you.
Wholesaler's gross income is the net fees/commissions that they collect. It is the accountant's goal to get that as low as possible with all the costs you incur(Marketing costs, travel costs, home office, etc)
Good luck with your wholesaling business!