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?
Asked By: Hakuna Matata - 8/7/2007
Best Answer - Chosen by Asker
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... More
Answered By: acermill - 8/7/2007
Additional Answers (3)
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... More
Answered By: SmartA$$ - 8/7/2007
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.
Answered By: zocko - 8/7/2007
Answered By: Terry S - 8/7/2007
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