If it is a year-round activity rather than a sideline, then you would be operating a business. Those fixer-uppers would be considered inventory rather than capital assets. Your gains would be taxed as ordinary income. Costs of upgrading the property would become part of ‘inventory’ and would be deducted as a cost of sale when you sell the property. You could write off the taxes and interest you pay while you hold the property.
Income from this type business would be subject to 15.3% self-employment tax
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