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Flipping Houses Has Become A Fascinating—And Sometimes Very Fulfilling—Way To Make Money. By Taking An Ordinary House And Making It Extraordinary, You Can Make A Ton Of Cash From Improving It! All It Takes Is A Bit Of Hard Work, Style, And The Initial Investment—And Voila!—Success. Welcome To FlippingBasics.com, Your Free Guide To Everything You Need To Know About Flipping Houses. Here, You'll Find Free Resources, Articles, And Information On Our Helpful, Easy-To-Use Site.

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Revealed: 9 Important Tips To Successful House Flipping   Home Flipping 101: Make Maximum Money With These Methods   Flipping Houses: Common Blunders That Flippers Make   Hot: 3 Tips To Help You Find The Perfect Home To Flip  
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Latest Related Articles About Flipping Houses
7 Simple Tips For Flipping Real Estate
Unless you've been living under a rock for the past few years, you've probably either dabbled in real estate yourself, or at the very least, know someone who has. So, how does someone that's brand new to real estate start flipping homes? (And let's clear the air right now... IT IS NOT TOO LATE to start investing in real estate). Follow these 7 tips to start investing in real estate today: 1. Look In Your Own Backyard The grass is always greener in the other neighborhood, and it's easy to keep looking for the "right" area. The bottom line is that any area is the "right" area. In order to be effective in the steps 2 through 7, you've got to get over the idea that real...
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Real Estate Investing Benefits
There are many reasons why investing in real estate over other investment avenues is a safer and more profitable route to take and we will go over just a few of these factors with you in this article. First thing to note is that if you look at the real estate market as a time line compared to the stock market you will notice that real estate is a growing line with few major fluxuations. On the other hand the stock market has high points and valleys that range from quick high’s to sudden drops through out it’s history. It’s harder to look at the time lines of other forms of investing i.e. currency investing, mutual funds, buying gold and silver etc - but one thing is clear, no other market...
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Real Estate Investment Strategy - Flipping into the Wind
The practice of purchasing investment property and quickly selling it for a profit is commonly known in investment circles as “flipping.” In some cases, an investor may simply be able to acquire such a property at a steep discount well below market value, while in others the investor may have to invest some of his or her personal effort (sweat equity) and/or creativity (intellectual equity) into the property to raise the property’s value after it is acquired. The practice of flipping properties has been around for ages and many experienced investors make an extremely lucrative living by just flipping one or two properties a year. While flipping has proven to be an effective real estate...
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Tax Tips For Real Estate Investors Using Ira Funds

Author:
Stephen Nelson

You’ve seen the advertisements and news articles. IRA funds can be used to make real estate investments. But before you jump on this bandwagon, make sure you understand some of the tax planning angles related to this opportunity.

Passive Loss Deductions

Almost always, an important component of your real estate profits comes from the tax savings associated with depreciation. These paper losses, referred to as passive losses by the Internal Revenue Code, can save both small and professional real estate investors thousands of dollars a year in income taxes. Unfortunately, passive losses from depreciation and related, similar tax deductions won’t benefit real estate investors investing through IRAs.

Capital Gains Preferences

If you sell an investment for a profit—whether a stock or real estate—you get a tax break because your profit gets taxed at a preferential capital gains tax rate. In the best case scenario under current tax law, for example, your capital gains get taxed at 15% rather than at 35%.

Unfortunately, by putting real estate inside of an IRA, you lose this benefit. In effect, the appreciation you enjoy from your real estate investment gets taxed at your marginal income tax rate rather than at the capital gains rate. (Fortunately, the tax gets paid when you withdraw the money.)

Note: This “problem” also exists for other investments that produce capital gains, such as stocks and mutual funds that invest in stocks.

Unrelated Business Income Tax

In certain special circumstances, an IRA needs to pay income taxes on the profits it generates. These taxes, called unrelated business income taxes, essentially put the IRA investor in the same position as a regular taxable investor.

For example, if you’re developing and then flipping properties inside your IRA, you may actually be an active trade or business. And in this case, your real estate investment—even though it’s inside an IRA—may be subject to income taxes. (Your IRA custodian is supposed to report your taxable income and tax liability, and then pay the taxes but many don’t…)

And here’s another example of a situation where the unrelated business income tax can trip you up. If you borrow money to invest in real estate—the typical situation in any leveraged real estate investment—the profit you earn on the money you’ve borrowed is treated as unrelated business income. Accordingly, that profit is subject to unrelated business income tax.

Unrelated business income inside an IRA is taxed according to trust taxation rules, which means that as soon as you’ve made much money at all, you’re taxed at the highest marginal tax rates. Ouch.

Closing Caveats

Real estate is a great investment. And real estate belongs in any investor’s portfolio. But you need to think carefully about buying into the idea of using your IRA to make real estate investments. If you do decide to invest in real estate through your IRA, first consult with your tax advisor.

About the Author :

Delaware LLC formation author & CPA Stephen L. Nelson has written more than 150 books. Formerly an adjunct tax professor at Golden Gate University—the nation’s largest graduate tax school—Nelson is also the author of QuickBooks for Dummies. Copyright © by 2006 by Stephen L. Nelson, CPA. Contact him at http://www.llcsexplained.com/doityourself_Delaware.htm.


This article is distributed by: www.iSnare.com

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If you like the article above, you may be interested in the following article which is also related to Flipping Houses...

Is The House Flipping Hype For Real?
House flipping is hot -- to the point where more than one successful reality TV show has been created to feed the appetite of up and coming house flippers. But does the reality of house flipping measure up to the hype? House flipping TV shows have met with huge success because they speak to many homeowners' aspirations to make it big in one of the few areas they have some control over. "Buy it cheap, fix it up, and then resell it for a large profit", sounds like something anyone who can "work smart" is capable of doing. But there are problems. One of the big ones is that do-it-yourself renovators often do not realize the renovations they plan to do require permits and inspections. In some cases their renovations can be halted by unhappy neighbors disturbed by the noise and unusual activity next door. Flipping hype also leaves an unrealistic impression about the amount and complexity of the renovation work required in order to make a significant profit from a resale. Real estate experts claim there is simply no way a house can be improved enough in two or three weeks to bring in $50,000 or $75,000 above the original purchase price. Flipping accounting is also pretty suspicious. We've all seen those less-than-$2000 renovations completely transform a home on TV. But the reality is that real renovations often cost much more than these shows lead us to believe. Profit calculations made by flipping hypesters often leave out some pretty crucial information too. Simply subtracting the final selling price from the initial purchase price may look impressive at first. But this often completely ignores the full costs of renovation, permits and inspections, not to mention real estate agent fees, legal fees, and taxes. **Don't...
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