How does it work if you buy a house, fix it up, and sell it for profit
very soon after you made the original purchase? Are you penalized in
taxes for short term capital gain? How does this work?

short answer is yes. however the cost of the repairs/refurb are added to
your cost basis. If you live in it, you can eliminate that if you are in it
for 2 of the last 5 years. Short term CG is taxed at ordinary income tax
rates, which can change your tax bracket and is viewed as a bad thing,
unless you are making a "business" out of the real estate. Then a whole
different set of tax laws apply. Speaking only on Federal Tax as I know
NADA about MD.

--
Claudia
__________________________________
"Age is...wisdom, if one has lived
one's life properly." --Miriam Makeba, singer
"Elliott Plack, USAR" wrote in message
oups.com...
How does it work if you buy a house, fix it up, and sell it for profit
very soon after you made the original purchase? Are you penalized in
taxes for short term capital gain? How does this work?

On 20 Apr 2005 19:05:03 -0700, someone wrote:

.... Are you penalized in
taxes for short term capital gain?

No, there is no tax PENALTY. It is not taxed at any more than you
make from a regular job. There is also little advantage as there is
with longer term gains which are taxed at even lower rates than
ordinary regular income.


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