Wholesaler - Filing Income Taxes

[Courtney S]

As a wholesaler..when income tax season comes do I have to file income tax for any of the properties I wholesaled?...

If yes or no..what else am I required to report on income tax?

Thank in advance!

[Jon Holdman]

You have to pay income tax on the net income. You'll have to show the income received (assignment fees or the net amount you received from a double close or transactional fund deal). You'll also want to show all the expenses you incurred. Marketing, mileage for driving around to do the deals, anything you spent for inspections or appraisals, etc.

You may also be responsible for self employment taxes.

Wholesaling is not "real estate investing". Its a sales business. You're buying at one price and selling at a higher one. You pay taxes on the difference between the prices, less your expenses. Essentially the same as a small business person who owns a shoe store. They buy at wholesale prices, sell at retail prices. Their gross income is the difference between the two prices. They subtract out all their expenses and what's left is the net income. That's taxable.

If you actually took title, like for a double close, you'll owe short term capital gains tax. If you didn't, like an assignment, its ordinary income. Tax rate is the same in either case, though - your marginal tax rate. Plus state taxes. Plus, maybe, self employment tax (i.e., social security plus medicare, both halves since you're self employed, about 15% total)
If would be a really good idea to get a CPA to at least help you with taxes.