Posted by Pat on July 01, 2004 at 21:01:45:
Well that kinda sucks. I think I will sell my first property. I have held that since July 2002. If I understand correctly the long term capital gains rate has dropped from 20% to 15%.
Keep this other one for atleast a year (if not longer. Its only 3years old - Little or no maint.)Its a much better keeper than the 1st one (80 years old)
Thanks for all your help
Ordinary Income or Short Term Capital Gain - Posted by Pat
Posted by Pat on June 30, 2004 at 06:27:29:
Just bought a Split Level on the Court House steps on Monday. Paid 120. Appraisal in “as is condition” (which is a wreck) is 144. House across the street sold for 153K the week before.
This is the first property that I am flipping, so My question is - When I do the repairs and sell this property, is the gain considered ordinary income or a short term capital gain? I hope to have it FSBO by the 1st of August.
Thanks
Pat
Re: Ordinary Income or Short Term Capital Gain - Posted by John K Haslach, CPA, MST
Posted by John K Haslach, CPA, MST on July 02, 2004 at 07:28:38:
If this is the first time you have flipped a property and the only one you are doing, considering yourself to be in a trade or business as opposed to being an investor is a little too timid for me. Talk to a qualifed CPA about planning to support your investor status.
and to add to Tom’s comment… - Posted by David Krulac
Posted by David Krulac on July 01, 2004 at 19:39:47:
it makes you a dealer who can NOT
Re: Ordinary Income or Short Term Capital Gain - Posted by JOHN K HASLACH, CPA, MST
Posted by JOHN K HASLACH, CPA, MST on July 01, 2004 at 13:13:31:
If you are only doing one deal, I would consider it an investment and not ordinary income subject to se tax. I have never seen anyone who has done only one deal subject it to se tax.
Re: Ordinary Income or Short Term Capital Gain - Posted by Tom Bazley, CPA
Posted by Tom Bazley, CPA on June 30, 2004 at 11:18:30:
Being as short term cap gains are taxed at the same rate as ordinary income, it would seem to not make much difference. However, since, by your post, it appears your intent is to resell for a profit, that makes the property inventory. Meaning the profits will also be subject to self employment tax.