![](https://biggerpockets.s3.amazonaws.com/assets/member-blog-image.jpg)
![](https://biggerpockets.s3.amazonaws.com/assets/logo@3x.png)
Make more money with Az Hard Money Loans: Advice to Lower
Two things in life are inevitable, death and taxes. If you use Arizona Hard Money Loans to flip houses more than half of your profits might go to Uncle Sam. Learn some tactics to lower your tax burden so you can earn more money on your next flip.
Because of their short turn around, the profits from house flips are subject to the regular income tax rate, which could go as high as 37 percent. If you’re self-employed, you have an extra burden-FICA, which could add another 15 percent to your effective tax rate. We haven't even mentioned state taxes yet
So, if you’re a successful flipper how high could your tax rate be?
Consider a house flipper located in Taxifornia, say he earns 500 K each year solely from flipping houses. His income puts him in the top federal tax bracket, and because he’s self-employed he’ll also need to pay FICA, so his federal rate is 52.3 percent. We can’t forget state taxes; in California, the state will collect 11.3 percent of his income. So effectively 64 percent of his profits on any flip will go toward taxes.
Say he wants to flip a house, which could earn him 35 K in profits. 22 thousand dollars will end up going to Uncle Sam and the hippies in Sacramento.
Are there ways for our poor flipper to beat the system without risking incarceration?
With Arizona Hard Money Loans; consider using these tactics to lower your tax burden.
But what if you want to pay a lower rate, well there is another method that can effectively cut your tax bill in half-
By using the fix and hold strategy, he’s more than doubled his profits on this deal, and he's even earned extra rental income.
To use the fix and hold strategy you need to look for long termOne caveat if you're going to employ a fix and hold strategy is you need to be sure that your loan has a 13-month term. Unfortunately, most hard money deals don’t last that long. So, if you plan to employ the fix and hold strategy to lower your tax bill, you need to get long term hard money financing, before you start your project.
Regardless, if you maximize deductions or employ the fix and hold strategy, you can, beat the system and earn and earn a higher return from your next flip.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
[email protected]
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions
Comments