Posted by Nate-WI on September 20, 2006 at 21:28:43:
Why a newbie mistake? This is what REI do. Its a load of crap. We pay gains. So yes you have to pay gains on what you made after all your expenses including purchase price. How much you get taxed depends on what tax bracket you fall into. Talk to a CPA.
Nate-WI
Capital gains…I think I made a newbie mistake - Posted by Len
Posted by Len on September 20, 2006 at 20:37:08:
An investor found me and my partner a house to rehab. He also lined us up with a cash investor.
Scenario
Purchased house for 37,500
Gave this investor 10,000 for finders fee and to teach me
cosmetic rehab for 5,000
Total cash I borrowed was 52,500 ( mortgage lien for this amount filed against property
The 37,500 was wired for purchase
the other 16,000 was deposited into their account for services. They did the work but I do not have any receipts.
Sold house for 80,000
What is my capital gains? Thanks to all who reply
I think I made a newbie mistake - Posted by Natalie-VA
Posted by Natalie-VA on September 22, 2006 at 09:44:19:
Len,
The mortgage is irrelevant. You take your 80k sales price and subtract your expenses (37,500, 10,000 & 5,000) to come up with your gain. Also make sure you subtract any other expenses you had like utilities, agent commissions, closing costs when you bought and closing costs when you sold.
The end result will probably be taxed at your short term capital gains rate depending on how long you owned it.
I don’t see a mistake…good job.
–Natalie