Capital gains TAX and mobile homes

[Terry Drake]

I see that this has been discussed with real estate, but not much discussion about buying and flipping mobile homes and what taxes will apply. I understand the year and a day holding period for real estate, but what about flipping MH's? Will my profits be taxed at short term capital gains? (I think it's 35% or more here in FL).

[Jonathan V.]

http://www.irs.gov/taxtopics/tc409.html

About the best help I can give. Note:

"Capital gains and deductible capital losses are reported on Form 1040, Schedule D (PDF). If you have a net capital gain, that gain may be taxed at a lower tax rate than the ordinary income tax rates. The term "net capital gain" means the amount by which your net long-term capital gain for the year is more than the sum of your net short-term capital loss and any long-term capital loss carried over from the previous year. Currently net capital gain is generally taxed at rates no higher than 15%, although, for 2008 through 2010, some or all net capital gain may be taxed at 0%, if it would otherwise be taxed at lower rates. "

I believe the 35+% you are talking about is if you treat the sale as ordinary income, which you wouldn't. Unless you received bad tax advice.

Another thing you should "attempt" to do, is make an estimate of how much money you are going to "net" this year. And talk to your accountant about starting to make estimated tax payments.

And as far as structuring the deal, you will have to have a longer talk with a CPA than I can give on here in order to figure that one out. Don't go to an H&R Block or whatever, but an actual CPA firm.

Your first year, it won't make a huge difference, unless your planning on doing more than 3-5 I'd say. But after that, you'll start needing more advice. They'll want to know how many deals you are doing, what kind of investments you have, if you have another job, etc.

I'd be interested in finding out what they would say, as I'm currently waiting for tax season to be over to start my first deal.