in this video we’re going to answer the
question do real estate wholesalers pay taxes stay tuned hey what’s going on my friend this is
all coming to you live for my Empire pose to use on the road yes I’m still
out here in Long Island for another few days I’m gonna exhausted I want to get
back home okay but let’s get into this question let’s
get that answer so do real estate wholesalers pay taxes there’s a question
here as well that’s similar that somebody posted that that inspired this
topic and it says when do you pay taxes on the assignment fees profits you
receive is it wise to set up yourself and set business LLC as a real estate
investor which we did in another video entirely on LLC should you set up a
business LLC as an investor yes you should but it’s not the first thing okay
it’s not the first thing you should be worried about the first thing you should
be worried about is getting to your first deal and to get to your first deal
you gotta get started marketing okay and for you to get started marketing you
have to learn marketing so that you can put all your resources in the right
place where you’re gonna get the attention and start filling up your
pipeline with people calling you getting ready to give you a house you need
motivated sellers okay that’s buyers actual local real estate Association in
facebook groups if you have a good deal there are buyers ready to go if it’s a
good deal okay but your job as a wholesaler is to find those deals and
then connect them with investors that will fund those deals so the question
that you ask him here that inspires this video in particularly in particular is
the taxes when do you pay taxes on the assignment fee profit you receive so let
me first of all explain for those of you that are brand new here make sure you
subscribe click the red button and click the bell right next to it but let me
explain what an assignment fee is if you don’t know what that is so as a
wholesaler one of the ways for you to make money is to make money from my
signing contracts you put a house on the contract and then you assign it to an
investor okay so for example we’re talking earlier you get paid for finding
investors deals right to help investors find deals
that’s what you get paid for right and you give that deal
to an investor you assign the contracts that you put on that house you assign it
to an investor so an investor will happily pay you a fee up to ten percent
of the after repair value of the property or even more sometimes right so
for example it’s a $200,000 home you can make up to $20,000 or more from simply
finding the deal how do you find the deal you’ll find it $200,000 that’s a
house that’s what $200,000 after repair 65% of $200,000 is 130 the property
needs $30,000 of work just hypothetically right so now 130
minus $30,000 you put an offer in from $100,000 and $100,000 the owner says you
know what this house needs work it’s dirty
I have to move to Florida I don’t want to deal with this situation and they say
I’m letting go yes I’ll put on a contract for $100,000 right so you did
that and there’s a contract between you and the seller and you take that
contract you assign it right to an investor who is willing to pay $100,000
plus $20,000 to you why would the investor do that remember the property
is worth $200,000 right so the vessel is paying a total of 120 thousand dollars
so when they do that they basically put the work in they repair the property so
they spend another $30,000 repairing the property so get past us now up to 150
they put the house back on the market for $200,000 and they make a $50,000
profit good business right so that’s how they make money so now the assignment
fee that you made the $20,000 when do you pay taxes on that how you pay taxes
on that is on your own it’s called capital gain now some people
refer to it as capital gain some people report that as just a fee because that’s
what it is assignment fee what I would do is you need to understand that the
the title companies are not gonna take the taxes out you’re responsible for the
taxes on that money so in other words my rule of thumb is that when I make a
$20,000 $10,000 of it is not mine okay by default okay now I’m gonna write off
some expense for doing business and things like that
with the help of my certified accountant which is you find one because I’m not
one okay I ain’t but I just always assumed that ten thousand off of it it’s
not mine okay and if there’s less taxes then it’s just bonus money so just keep
that in mind that’s how it’s done the taxes are not gonna be taken out at the
closing when you get your fee you are responsible for that taxes and you Resta
sure that that money that income is gonna be reported so make sure you’re
paying your taxes find a certified accountant in your local area and work
closely with them on the best way for you to pay your taxes and follow that
money and one of the mistakes that people make is they write off so much
and they show very little in income that’s a bad way to go because you won’t
be able to build your financial profile properly so you can start buying some
rentals for yourself so you can stop building – well don’t be afraid of paint
some taxes okay we live in a system that’s what bossed okay it’s a beautiful
thing so pay some taxes find a balance show some income show a minimum of so on
between 50 to 100 thousand dollars income per year so you can do things
that normal people do you want to buy a car you can finance a car you wanna
finance a home you can do those things because chances are your might
– a person who would like to enjoy such things so you don’t want to be in a
situation where you write off everything and then you can’t show an income and
it’s just all the maths walk with a certified accountant so you can do what
works best for your particular scenario well what pays taxes you pay the taxes
when is it paid on your own after you receive the money so don’t go to the
mall and start spending the money as soon as you close the $20,000 deal make
sure that you are keeping books okay so that’s what I have for you on this video
again we gotta get to the deal first you gotta get to the deal how you’re gonna
get – that is very marketing how are you gonna learn marketing I have a free book
for you it’s called small real estate wholesaling and you can download it for
free at small real estate wholesaling calm and hopefully even enlightened
uneducated and I will see you on the next one don’t forget like share
comment your questions below in this video see you on the next one and these


  1. Do you know the difference between property taxes and capital gain taxes?

  2. thank you!

  3. I can’t download the book??? I tried getting the PDF version but it doesn’t work.

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