This means you subtract your total capital losses from your total capital gains.

Like any trade, you need to get a few quotes, ask what they specialize in, and see if you are a good fit. 3.As far as location, it doesn't really matter, the IRS is nationwide and from there states add or subtract their rules. 4.

Now subtract 20%.

So, to make a profit you have to subtract 8% for sales, and whatever renovation costs and any carrying costs.

Please help me to understand my calculations.This is an example:Comps on a property = $250,000 (ARV)Owner originally got a loan for $200,000Owner has paid $80,000 on loan so far ($80,000 equity)Owner has an outstanding loan balance (or mortgage) of $120,000 ($200,000-$80,000)Owner is asking for the loan balance of $120,000 + $15,000, for a total of $135,000 (asking price)So, if I have an ARV of $250,000, and I subtract the following (to get MAO):$3,750   >   Acquisition costs (1.5% of ARV)$17,500  >   Sales costs (7% of ARV)$10,000   >   Holding costs (4% of ARV)$20,000   >   Profit (I want to make on flip)$33,000   >   Repairs (based on $15 per sq ft on a 2,200 sq ft property)$3,300   >   Hedge (10% of Repairs)= $162,450 MAO (Maximum Allowable Offer)Then, do I take this amount and subtract the $120,000 mortgage (loan) = $42,450, and then subtract out the $15,000 that the owner would like to have, leaving an additional $27,450 for profit?

Find out what other similar properties in the immediate area are selling for and estimate an ARV (after repaired value)Multiply that times 70% Subtract guesstimated repair costs = most that you should offer (max that you ought to be willing to pay)Scrub (eliminate) the ones that are corporate or bank owned (you are not going to out- negotiate them).Just start talking to the owner(s), ask lots of questions, find a common ground and be patient.

Positive CF subtracts from it. 

I ask why and he stated that when the tenants were late on their rent he subtracted the late fees out of their deposit.

Should I include vacancy and maintenance in the monthly expense and subtract it from the cash flow, or keep the cash flow at the higher number (keeping escrow's for the vacancy/repair) when calculating ROI? 

If you don't want to do that, I definitely suggest that you have a CPA prepare this year's return as there will be some extra complications with the property sale and depreciation recapture.Essentially, you get the "credit" for that $22,273 in the year of sale as that is subtracted from the sales price to reach your capital gain amount.