Investor · Charleston, SC · Member since 2011 · 45 posts · 8 votes
In my state, tax lien redemption is 1 year.
If the property redeems in 1 year, and you get your money back and interest in longer than 1 year, can I treat the interest as a Long Term Capital gain?
Also, if I get the deed to the property, and not the interest, after 1 year. If I flip that property 1 month after the expiration of the redemption period, does the gain count as long term or short term? It would make sense that it is long-term, since I committed my money 13 months before getting the payoff - the money on the flip...
If the property redeems in 1 year, and you get your money back and interest in longer than 1 year, can I treat the interest as a Long Term Capital gain?
Also, if I get the deed to the property, and not the interest, after 1 year. If I flip that property 1 month after the expiration of the redemption period, does the gain count as long term or short term? It would make sense that it is long-term, since I committed my money 13 months before getting the payoff - the money on the flip...
The first question is are in the trade/business of tax liens. That can make a big difference in the answer.
This article should answer your question fairly well: http://www.parkertaxpublishing.com/public/tax-auctions-capital-gain.html
Wholesaler · Lehi, UT · Member since 2015 · 333 posts · 144 votes
10y
"Capital gains" refers to the money you make after you flip. A capital gain is a result from the sale of a capital asset like bond, stock or real estate. It is a higher tax bracket for the most part. You can talk to a tax attorney to find out if it is short term or long term. If you have acquired a property either from a tax lien investment or a tax deed investment, when you sell or flip the property then the money made becomes what is called capital gains.
If the property redeems in 1 year, and you get your money back and interest in longer than 1 year, can I treat the interest as a Long Term Capital gain?
Also, if I get the deed to the property, and not the interest, after 1 year. If I flip that property 1 month after the expiration of the redemption period, does the gain count as long term or short term? It would make sense that it is long-term, since I committed my money 13 months before getting the payoff - the money on the flip...
The first question is are in the trade/business of tax liens. That can make a big difference in the answer.
This article should answer your question fairly well: http://www.parkertaxpublishing.com/public/tax-auctions-capital-gain.html