Flipping and Capital Gains

A common dilemma for real estate investors is the issue of flipping and taxes. In this article, we look specifically at the tax issues associated with flipping and capital gains.

In recent years, people have been looking at the real estate market as they once looked at the stock market, eyes filled with dollar signs. Flipping became a popular real estate investment strategy to make fast cash. However, one thing that people forgot in their haste to play the game was to be properly prepared with the knowledge to avoid paying high taxes on their profits. Towards that end, here's some noteworthy information about taxes as you think about your flipping strategy.

First, in order to avoid overly onerous "ordinary income taxes" on flipping properties you must have the property treated as a capital gain. Most often, if you sell the property in less than a year, you will be taxed at the ordinary income tax rate, which can be in excess of 35 %. Only when you've held the property for more than a year, does the long-term capital gains tax of 15 % (for most tax payers) come into play. In order to have the property treated as a capital gain you must show that you had no intention of flipping that property. Ironically, this could entail holding the property for this extended period of time which counteracts the whole point of flipping - which is to make money fast.

Also, it's not only about "when" you flip, but about "how often" you flip. If you flip too often, the IRS may view that this strategy is your "trade or business" and therefore the profits you make are subject to ordinary income and self-employment taxes. And you don't want that.

Secondly, if you want to employ other strategies to avoid big taxes like installment or structured sales or private annuity treatment while flipping, you can't. Spreading tax out doesn't work because the property is not labeled investment property. This again goes back to issue of holding periods and intention of sale.

If you are hoping to use the 1031 exchange strategy as the approach for flipping and capital gains, again you will find yourself between a rock and a hard place. 1031 exchanges are reserved for investment properties only and if you can prove, through holding periods and intention, that the property is a capital gain or investment property, you will not be eligible. The IRS supports investors and savers, not speculators and gamblers.

Once most of your tax deferral options are exhausted, your last resort for flipping and capital gains may be to have that property re-characterized to a capital gain property by moving in to it and treating it as your personal residence. It may work, but holding even longer holding periods apply.

In conclusion, flipping can be an exciting and fast way to make money. But when it comes to taxes it is hard to make flipping and capital gains work together.

Real Estate Note Listings

The number of people on the lookout for real estate notes are increasing day by day, as the profit involved in the business is great. Lots of websites provide real estate note listings. Business, commercial and residential notes are the major categories of real estate note listings. Real estate note listings are ideal for both buyers and sellers. They are also used by real estate note brokers to improve their business.

Real estate note listings provide buyers a wide range of selection. Through these listings they can purchase real estate notes at a higher profit margin. Location is another great advantage with this type of listings. You can purchase real estate notes from your locality or any other locality you prefer. Another advantage is the variety of listings available. If you are interested in commercial real estate notes, you find them in a separate category and you don't have to search all real estate note listings. The greatest advantage you get from real estate listings is that your real estate note would be displayed to different types of investors. Prices offered by different types of investors vary. Sometimes you could enter into a deal beyond your expectations with the help of these listings.

Real estate note listings are also ideal for people who need immediate cash. With the help of real estate note listings, you can quickly find a buyer who would be ready to release cash immediately for a good discount. Real estate note listings allow you to easily sell a part of the note or the whole thing. Real estate note listings have much flexibility, and they can be used by both sellers and buyers. Blindly believing real estate note listings can be dangerous. It is better to take each single note in the listing and see whether it matches your selling or buying criteria.

Sell Real Estate Notes provides detailed information on Find Real Estate Notes, Real Estate Note Brokers, Real Estate Note Buyers, Real Estate Note Listings and more. Sell Real Estate Notes is affiliated with Sell House By Owner.

What to Look For In a Los Angeles Real Estate Company

Each year, a large number of American homeowners decide to sell their homes. If you are one of those homeowners, have you already sold your home? If not, what method of selling do you plan on selecting? Many homeowners are under the misconception that selling their home without professional assistance will return a higher profit.

If you live in or around the Los Angeles area, you may want to consider seeking professional assistance from a Los Angeles real estate company. Real estate companies are usually a collection of agents who specialize in offering assistance to homeowner?s who are looking to sell their home. If you are interested in seeking assistance from a Los Angeles real estate company, you have a number of ways to find the perfect company.

If you live in the Los Angeles area, you can use your local phone book to find a number of local real estate companies. To find the perfect Los Angeles real estate company, it is advised that you speak to a number of real estate agents. This means that you should contact multiple real estate companies. In your local phone book, these companies should be listed under the heading of real estate.

In addition to using your local phone book, you can also use the internet to find the contact information of multiple real estate companies in or around the Los Angeles area. There are a large number of online business directories and online phone books. You can easily use these resources to find a number of local real estate agents.

It is also possible that you could find a local real estate company?s online website. These online websites can most easily be found by performing a standard internet search. You can search for a specific real estate company or you search for companies located specifically in the Los Angeles area. Whichever online search method you choose, you should be provided with a large number of results.

Before deciding on a particular Los Angeles real estate company, you are encouraged to meet the agent or agents that you will be working with. When meeting these individuals, you are encouraged to examine their customer service skills, along with their training and experience selling real estate. An agent?s customer service skills and real estate training is vital to the successful sale of your home.

When examining a particular real estate company or agent, you will also need to determine their method of payment. Most real estate companies will receive their fees based on a preset commission percentage. The exact dollar amount of this percentage will be determined after your home has sold. With the proper amount of research, it is possible to find a Los Angeles real estate company that only requests a one percent commission.

Taking the time to find and examine a number of real estate companies in the Los Angeles area is the best way to ensure you are getting what you pay for. Why settle for second best, especially when with a little bit of time and research you can find the best real estate company in the Los Angeles area?

Brad Horn is a writer for 1 percent realtor where you can find a great resource for information regarding a Los Angeles Real Estate Company

Tempe Homes: Finding the Perfect Home in the Perfect Community

Thinking about buying a home in the Tempe area? Tempe, often called The Valley, offers some of the most diverse real estate in any area.

What kind of home are you thinking about? Do you picture yourself in a neighborhood with tree-lined streets, or would you rather be in a community that requires little maintenance? Either way, you'll find it in Tempe.

Looking at the multiple listing services for Tempe, you'll see that most homes fall into one of a few categories:

Master Planned Communities

Master planned communities are especially popular throughout Tempe. They are often clustered around a geographic feature, such as in the foothills, on a mountain side, or near the desert. They are situated to take advantage of the natural views.

Several different builders usually develop homes in each neighborhood. The big advantage to the planned community is that it offers all the amenities within a compact area, schools, parks, community centers, and recreational opportunities such as golf courses and horse riding stables.

Each one uses a similar architectural theme, with a variety of different floor plans. If you are looking for a brand new home, these communities are a great choice. You can select your preferred floor plan and make the upgrades you'd like. These areas include a variety of price ranges, especially more affordable homes, and they have a great history of appreciating prices long term.

Resale Homes

Tempe is a great area for new homes, but you'll also find wonderful older houses. These properties are very distinctive, many in Mediterranean styling, with mature landscaping and large lots.

Resale homes are especially appealing for those wanting a well-established neighborhood, with its own unique culture.

Condominium Communities

Condominiums are a popular housing alternative in Tempe, but they don't merely refer to small apartment-like properties. Tempe offers luxury condominiums several thousand square feet in size and resembling world-class hotels. Of course there are also smaller units perfect for first-time buyers.

Active-Adult Communities

Tempe is a popular destination for tourists, young professionals relocating for a job, and of course, retirees. An exciting part of the real estate market is the active-adult community.

These communities offer a variety of amenities to home buyers, including golf courses and clubs, fitness centers, tennis courts and swimming pools. Homes in these communities are often patio homes, town homes, or stand-alone properties.

As the baby boom generation ages, these communities are becoming increasingly popular.

Whatever your age or style, you'll find a great variety of homes to meet your needs in Tempe.

Reg Gustin is a senior loan officer with Sun American Mortgage and specializes in helping families and their financial lending needs.

Get a FREE mortgage rate quote from a reputable Arizona mortgage company at http://www.arizona-homes-store.com/arizona-mortgages.html.

Search the Arizona MLS at http://www.arizona-homes-store.com/arizona-mls.html

Click here: http://www.arizona-homes-store.com/arizona-real-estate-appreciation-report.htmland get a FREE copy of The Greater Phoenix Area Housing Appreciation Report, as compiled by Arizona State University with your free subscription to his monthly ezine, MARKET NEWS.

Real Estate Investment by Foreign Nationals Uh oh?

So inspiration hit me in Montreal this weekend after some drinks. It wasn't the alcohols effects that caused it (I swear!!!), but the not so wonderful cost.

When I went to school in Burlington VT ('97-'01), my friends would frequent Montreal for numerous reasons. A few that come to mind were the beautiful scenery (a.k.a. strip clubs), the drinking age of 18, and the fact that they could go out to eat, get surf and turf, appetizers, and drinks for $25 American.

Not so anymore..... the same principle definitely effects peoples purchasing decisions in most realms, Real Estate included. I found an interesting article http://travel2.nytimes.com/2005/05/29/realestate/29lizo.html?ex=1154059200&en=399b29e55613ce54&ei=5070 titled Who Needs the Riviera, that focused on a small group of Europeans taking advantage of their strong Euro in the American Real Estate market. The article also indicated that it wasn't necessarily a small group of Europeans settling in the area.

The current exchange rates are not just favoring those with a strong Euro versus the Dollar, however it also appears to be fueling some currency speculation through housing. Another article http://www.myrtlebeachonline.com/mld/myrtlebeachonline/business/15045250.htm South Korean cash flows into U.S. real estate shows a perfect example of the reasoning behind the speculation.

They (wealthy Koreans) are betting that the U.S. dollar will strengthen, causing the value of their U.S. holdings to appreciate when converted into Korean currency, and that even slower home-price appreciation in the U.S. will continue to beat returns in Korea, where high taxes on real-estate profits discourage speculation.

With interest rates on the rise, I think that their guess that the US dollar will strengthen, is a very educated guess.

So is this a good thing or not? Well it depends on who you are.

If you're a homeowner worried about the value of your home in an uncertain market, this should ease some of your stress. Foreign investment can be a great thing for homeowners in a certain area. The increase in demand and foreign money to an area that did not have it prior, will absolutely help increase/sustain property values of other homes around the area.

For those of you still renting waiting for just the right time......If you're going to be in the same area for a few years, and you have good credit, the best time is now.

And for potential investors just waiting around for the bubble to pop and great deals to start popping up from people who overextended themselves, it appears as though you might have some foreign competition on some of those purchases.

Jon Ernest is the Principal Broker of Spotlight Realty. A small, independently owned, full service residential real estate agency in Brookline, Massachusetts.

http://www.SpotlightRE.com
Condos for sale
See this article and other rants and raves on my Cambridge Brookline Boston Real Estate Blog

Home Staging Can Help You Sell Your House Quickly

Real estate prices have hit record levels in the United States during the last five years. In some parts of the country, prices have tripled. For those selling houses in the first half of the decade, business was very good, indeed. Rising interest rates and sticker shock have slowed the market down, however. In some parts of the country that used to be hot, sales have slowed to a crawl. In those markets, people who want to sell houses are now waiting months when homes used to sell in days or weeks. What can a homeowner who wishes to sell as quickly as possible do to accelerate the process?

A relatively new service called home staging may be the answer. Staging a home essentially means setting it up so that it makes its best possible presentation to the market. Professional home stagers will, for a fee, come to your house, examine your property, and make recommendations as to what you might do in order to make the house as sale-friendly as possible. In some cases, they will simply recommend a coat of paint, a bit of landscaping, or some new drapes. In other cases, more dramatic help may be needed.

It is often difficult to sell a home that has been vacant for a while. Buyers have a hard time imagining what their belongings might look like in an empty house. A good staging company will have in their inventory a selection of different types of furniture, lamps, decorative accessories and more so that a vacant home can look like a showcase. A fully and tastefully decorated home is much easier to sell than a vacant one.

The service isn?t necessarily inexpensive. Homeowners might expect to pay several hundred dollars for an initial consultation as well as a fee of several times that amount for the first month of a fully furnished, professionally decorated home. Rates for subsequent months tend to be lower than for the initial month, but many homes that have been professionally staged aren?t on the market much longer than a month. In fact, studies have shown that staged homes often sell in half of the time of other comparable properties.

Having your home professionally decorated in order to sell it isn?t something that everyone needs to do. But in markets with slowing real estate sales, staging a home may be the difference between selling the house this week and selling it three months from now. For many sellers, the investment is more than worthwhile.

?Copyright 2006 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.HomeEquityHelp.net, a site devoted to information regarding home equity loans, mortgages and lines of credit.