The corporate tax that is imposed on every for profit business organization is on their profits that they made for any fiscal year. Their net worth has no bearing on the tax liability.
You must be experiencing a financial hardship and be able to provide the lender with documentation that support your inability to make payments or cover the short fall if the property was sold. This means you can’t have assets that could be converted to cash to pay the lender. Some examples of events that lead to financial hardship are loss of a job, divorce, medical situations and death. It can’t be that you have decided to stop making payments because the house is no longer worth what you paid for it.
The major problem with doing taxes for yourself is that you don’t know the tax laws. You may think you made $5,000 but that is only the gross income before taxes. Many businesses have problems with paying taxes because it destroys the bottom line but they must be paid. There are two basic classifications you can place house flipping into; the first of which are self employed taxes and short term capital gain. You would rather be placed in the short term capital game section because you pay fewer taxes. If you’re self employed, you have to start paying as much taxes as a business.
When you add up all the possible deductions, you will be surprised (and we guess glad) to see how much you can save on your tax bill. We know tax preparation can be a daunting experience for many, and most of us can’t afford to hire a Best Affordable Torrance CPA. That’s where tax preparation software saves the day. There are several titles available, simply do a search on “US tax software” and you’ll get several to choose from. We personally have used Turbo Tax (yes, the software cost is deductible) for several years and it makes figuring out your business taxes a breeze. It saves hours of time pouring over the IRS publications and helps you find deductions you may not have otherwise thought you had available.
The value of your home is less than what you owe. This means if you sold the house you could not get a price high enough to pay off the combined mortgages.
If you operate a business primarily from your home, and use a portion of your home exclusively and regularly for business purposes, that area is deductible. Meaning a portion of your rent, your utilities, your real estate taxes, your home repairs… and more… is tax deductible. Also deductible are the equipment, the tools, the computers, the cell phones, (the ironing boards!) you use, at least to the extent they are legitimately used in the operation of your part time or full time home-based business.
If you are having a hard time or need some help, there are plenty of resources available to assist you. Try your local furniture, home improvement, and specialty stores. You may also want to talk to your financial planner or tax accountant about the different benefits you can get for incorporating these many different things. Everyone needs to start doing there part to protect our planet’s resources. Go green and encourage others to do the same today.