Home Ownership (misc.consumers.house)

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Elliott Plack, USAR
 
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Default Short term gain tax (MD)

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?

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ClaudCar
 
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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.

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Claudia
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"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?



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v
 
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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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