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#1
05-31-2005, 03:09 PM
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 Capital Gains vs Self Employment Tax RatesArkansas What is the name of your state? Arkansas  Good day, and hope you all had a great Memorial Day!. Just found this site. Looking for info regarding the Capital gains tax rates and Self employment tax rates. Bought a house in August of 2004 have been renovating it. Have done the work of a general contractor, but have not paid myself (yet). Would it be better to pay myself or take the profits from the sale. House and land cost $10,100.00 extra lot $100.00, approximately $33,000 of improvements. Total investment approx $43,200.00 estimate to sell at $75,000.00 realizing a difference of $31,800.00 Which would be best, sell the house and be subject to capital gains on $31,800. or bill out a contractors fee for 10 to 11 months work in the amount of about $30,000. Thank you for  your reply. Oh, I do not currently live in the house. thanks again.  Last edited by blackhouse; 05-31-2005 at 03:23 PM. |
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#2
05-31-2005, 05:45 PM
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| Are you a contractor who is in the business of buying houses, fixing them up, and selling them? If so, you are self-employed. If not, you have a hobby. Take your info to a competent Enrolled Agent and let them help you decide. Since you are doing a job for your own gain, and not for anyone else's, ie fixing up a house for joe schmoe who then sells it, I would just pay on the capital gains, and not take it as employment. The Self Employment + income taxes far exceed the capital gains rates anyway. Snipes
__________________ This post does not create an agreement to represent you before the IRS, nor does it invoke confidentiality regulations. Postings are based only on the information provided and you should consult a tax professional in your area before relying on information contained in this post. |
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#3
05-31-2005, 09:02 PM
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Enrolled Agent?Snipes, Thanks for the reply. No I do not have a business set up. I'm just doing this for myself,  hobby I guess. SAW AN OPPORTUNITY TO TURN A BUCK AND COULDN'T PASS IT UP! What is an Enrolled Agent? Thanks again for your input. Carla OH, another question, how much of a tax hickie do you think I will have to take, what percent? Or where can this info be found, the Enrolled Agent?  Last edited by blackhouse; 05-31-2005 at 09:05 PM. |
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#4
06-02-2005, 01:41 AM
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| To find an Enrolled Agent in your state, go to [url]www.naea.org[/url], and search by state. An Enrolled Agent is someone who is certified by the IRS to represent you in a tax proceeding. (It means we know a lot of tax stuff). Your tax hit will be 15% of whatever the "gain" is on the sale. According to your post, that would be 15% of 31.8K. So that's $4770. Snipes
__________________ This post does not create an agreement to represent you before the IRS, nor does it invoke confidentiality regulations. Postings are based only on the information provided and you should consult a tax professional in your area before relying on information contained in this post. |
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