Flipping houses is a serious business for a lot of people who are in the real estate industry. The market may not be doing too good these days but flipping houses can potentially give good profit.

What exactly does flipping houses mean? This is a legal business wherein an individual invests on a property and sells it for a higher price. Usually, those who have sufficient funds would buy a house that is not on its tip top condition. Hence, the price is quite lower too. Once the property is bought, proper restoration and repairs will be done to transform it to an astounding unit. That way, it would be possible to sell it for an amount that is higher than the original selling price.

Are you into the same business endeavour too? If yes, then you are probably aware that taxes could sometimes slash off a chunk of the profit that should have gone to your pocket, right? Yes, it is necessary to comply with tax laws to be able to avoid serious problems. However, you need to know that there are legal ways on how to reduce the amount of taxes that you need to pay.

Tax break can be obtained if the two-year residency rule is completed. This provision became effective in 1997. Yes, this may mean holding off on the selling for a while but it is amazing how much more you can profit if you do no have to settle the capital gains tax. If you are married, living in the house for two years will entitle you for a whopping tax break. The moment you sell the house, more money would go straight to your bank account. The two year wait may sound too long but having a little patience sure leads to more income.

You have to decide between short term gain and long term gain. According to tax laws, if you sold the house more than one year after owning it, you can file for a bigger tax break. The difference in the amount of tax deduction is significant compared to selling the house just a few months after you bought it.

Federal 1033 tax deferred exchange is something that you can work with too. This provision states that if you purchase another property with the same value using the profit from the initial property, the taxes can be rolled. This is an effective method for people who intend to make their investment grow bigger and bigger by improving the houses they purchase to be able to sell them for a higher value. The cashing in may not happen immediately but the profit could be really worth the wait.

The field of real estate can be profitable for people who know how to strategize well. It is not all about sales pitching. Finding the right timing is important too. The good thing is that there is no need to think of some hocus pocus just to work around the tax laws. There a legal ways on how to get exemption when buying and selling houses. It would be best to consult a real estate account who is very knowledgeable on tax laws to avoid encountering any problems. Making wise and legal decisions will help you get more profit if you are into flipping houses.

Seomul Evans is SEO services consultant and content writer for leading Dallas IRS Help. Visit the site to know more about Dallas IRS Attorney.

Seomul Evans is SEO services consultant and content writer for leading Dallas Tax Attorney http://www.dallas-irs-help.com/ http://www.dallas-irs-help.com/our-firm/dallas-tax-attorneys

Author Bio: Seomul Evans is SEO services consultant and content writer for leading Dallas IRS Help. Visit the site to know more about Dallas IRS Attorney.

Category: Business
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