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Updated almost 4 years ago,
Capital gains taxes on a flip - state vs federal
Hello!
While building a financial model, I realized how mediocre my understanding of taxes are.
Assuming a flip is done in less than a year - so short term capital gains - what are the taxes to account for?
My current assumption is that you'd be taxed at the federal and state level as if the capital gain was normal income, and so it would be taxed at your current tax bracket.
I've recently heard that states have a capital gains tax separate from the income tax earned on a property, but there was no clarification of if this is done on top of or instead of the income tax on a flip.
So, from the following, how many are to be accounted for in a short term flip?
1) Federal capital gains at capital gains rate
2) Federal capital gains at income tax bracket rate
3) State capital gains at capital gains rate
4) State capital gains at income tax bracket rate
5) Others that I haven't listed
Thank you so much!