A question for the accountants in the crowd
So, I'm planning on registering a partnership in the next week. I think I understand a couple of things about how taxes work. I'm planning on doing some real estate investments, some which should be making me income almost immediately. I understand that if I flip a house I have to pay taxes on the capital gains (buy house for 200K sell for 220K, pay taxes on 20K). I think that any interest payed on borrowed money to make the investments is tax deductible. So is a portion of the renos, as far as I know.
I plan on accumulating a certain amount of money in the company's bank account. It will be important to do this, as the more money is in there, the easier it will be to keep picking up mortgages on houses I buy. Problem is, this company probably won't last more than 3-4 years, when the partnership plans on breaking up and going our separate ways.
My question is, when the company splits up there will be a certain amount of money that will need to be split up between the partners. Now, the company will have been taxed every year on its income, so any money that the company accumulates will be after-tax income. What happens to this money after the partnership expires? If I were to move the money from the company into my personal bank account, will I have to pay taxes on that money as personal income?
Another quick question. I think that a person needs to pay about 45% tax on capital gains. Is it any better for a company? I've heard that businesses only pay 16-19% tax on income as long as it's less than 200K in one year. Are the capital gains considered the same as regular income? Or are there separate rules for real estate capital gains??
Any good accountants out there that deal exclusively with small businesses? CPers always seem to be pretty good in the referral department...
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