I’m thinking about starting a home-flipping business as a second source of income and then eventually (hopefully) bring my main source of income.
I’m wondering if it is recommended to open an LLC for my first project?
If I don’t, how would tax deductions work? Would I still be able to deduct my project expenses when filing taxes? Just by giving my accountant all the receipts and etc.
Let’s say I buy a home for $100k and I sold it for $300k. The profit for this project would be $200k, but all the expenses add up to around $120k so what I pocket is actually $80k. Expenses being: material, labor, hard money loan monthly payments, utilities, staging, agent commission and etc. Would I only get taxed on $80k instead of $200k?
If this is not how it works, can somone explain?
Also, how would deductions work if I did open an LLC?
disclaimer advice will only be used as a starting point for research, I will consult a tax professional.