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| *Loan,banking and credit>>>real estate tax |
What's the best way to minimize taxes on profit from selling real estate? |
I buy, fix up and sell houses. I also have a pretty high-paying job, which puts me in a high tax bracket. Typically I would have to pay my high income tax on the profit from selling a house or I can wait one year and just pay capital gain on the profit. How can I minimize my taxes on the profit when selling a fixed-up house within one year of its purchase? If you sell such a property in one year or less, you do not qualify for capital gains treatment, and must add the entire profit to your regular taxable income. Hold it more than one year, and you fall under capital gains taxation treatment. You might consider consulting a qualified tax accountant to see if you can somehow engage in a 1031 exchange program, which will keep rolling your profits into the next purchase without current tax liability. you'd have to look into the details, but you might want to start a business, then you can write off all expenses such as supplies used to fix the house. You can also re-invest that money into the business toward the next house so you can control how much you actually pay tax on by how much you take out of the business. Talk to an accountant about the details of how this would work. Look into a 1031 exchange. They let you roll the money over into the next property and defer taxes. Otherwise, move into the house and stay two years. You get all the taxes you saved plus your profit. 1031 Exchange. |
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