How much tax would a person have to pay on a sale of real estate in a "flip"? For example, let's say I bought a foreclosure house for $50,000 cash (no mortgage), and put $25,000 into it for repair/renovation (for a total expense of $75,000), then sold the house for $125,000 a few months later. I would have a net profit of $50,000.

tickle

Aside from the tax, have you noticed what you typed ? You are buying a house for a flip, $50,000. and you say you are realising a profit of $50,000. You are getting the same out of it, that you put into it. That doesnt make sense.

AtlantaTaxExpert

Tickle:

Check your math! He bought it for $50K, invested another $25K for repairs and renovation, then sold it for $125K.

That, in my book, is a $50K profit.

Jordan:

That is a short-term capital gain. Assuming you do NOT have offsetting capital losses, you will pay taxes on it at your marginal tax rate, probably 25%.

Adam Jacobson

Your short term capital gains could be up to 35%. Check with your accountant or contact me to refer you to one.

AtlantaTaxExpert

Actually, it could be as high as 47% if you factor in the state income tax.