Real Estate Professional?

What is the name of your state? CA

If you are a real estate professional and you form a corporation for your investment properties, how are you taxed when you sell a property?

Is it a capital gains/loss situation?

Or is it an ordinary income situation because the properties would be considered your "inventory" since you are a r/e pro?

[HomeGuru]

Originally Posted by RubyRose

What is the name of your state? CA

If you are a real estate professional and you form a corporation for your investment properties, how are you taxed when you sell a property?

Is it a capital gains/loss situation?

Or is it an ordinary income situation because the properties would be considered your "inventory" since you are a r/e pro?

**A: what? You are totally confused. Being a real estate pro has nothing to do with income taxes due when a corporations sells real property.

This IS the Tax Law forum, is it not? It says Tax Law.

[HomeGuru]

Originally Posted by RubyRose

This IS the Tax Law forum, is it not? It says Tax Law.

**A: yes it is. Read my post again and again.

[PghREA]

RubyRose,

To answer your question, real property is an asset which has a useful life and can be depreciated. When sold, it is subject to capital gains tax. If you are in the investment property business, you need to get to a CPA who specializes in taxes or a tax attorney real quick! The answer to the question you asked is probably on the first page of "Real Estate for Dummies". I know it is in the first chapter of any text book used in a real estate pre-licensing
course.

[JETX]

This is a DUPLICATE post with responses on BOTH threads.
I would suggest that any further responses to this thread be made to the one at: [url]http://forum.freeadvice.com/showthread.php?t=199973[/url]

[Snipes5]

First of all, if you have this set up as a corporation, YOU aren't selling any properties, the corporation is.

Secondly, the income you will report on YOUR return will be what is reported to you from the Corporation form 1120.

Lastly, the short answer is no, property bought and sold by a real estate professional is NOT eligible for the more favorable capital gains rates. It is most likely ordinary income subject to self employment.

Find yourself someone who specializes in corporate taxation. It doesn't have to be a tax attorney. An Enrolled Agent will suffice. Try [url]www.naea.org[/url] there is a state by state EA listing, with specializations.

And one more thing... don't post your questions in more than one forum. As you can see, it annoys people, and then you have to wade through a ton of garbage before you get an answer, if at all.

Snipes

[JETX]

Originally Posted by Snipes5

First of all

Just curious.... as an experienced forum member, why did decide to continue this duplicate thread (and cause further confusion) when you were clearly 'noticed' of it being duplicate and provided with a link to the longer (8 replies at the time) thread????

[Snipes5]

Because it's a tax question, not a real estate question.

Also because the poster is new, and it's easier to give the benefit of the doubt answer the question, and get on with life.

The sooner the questions are answered, the sooner both threads will fall into oblivion.


Snipes