Question by cdamprun: I was thinking of starting a business where I flip houses. Would I have to pay income taxes or any other taxes?
I was thinking of starting a business where I flip houses. Would I have to pay income taxes or any other taxes on the profit I make on each house? Are there any small business tax breaks that would exempt me?
Best answer:
Answer by jim
Bad idea. No one makes money by buying and selling houses.
If you do manage to make money, of course you pay taxes on that. However, the nice thing about being self employed is that almost everything becomes a tax deduction. Car expenses, office expenses.
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You would pay income tax on all your profits. If you make a business of this, you will also owe self-employment tax on your profits.
There are no tax breaks for this type of activity unless you do it as a passive investment, holding each house over 1 year and making sure there is no element of inventory.
You would owe tax if you made a profit on a flip. These days, you have to be very good AND very lucky to flip houses profitably.
There wouldn’t be any small business tax breaks that would exempt you. Small businesses pay income tax if they make a profit.