I What about the cash flow and tax - US perspective -

-----Original Message-----
From: Don Starr, CPA [mailto:don at dstarr.com]
Sent: Sunday, October 16, 2005 11:11 AM
To: taxman at centa.com
Subject: I What about the cash flow and tax - US perspective
David,
Don Starr in Blaine is adding to the explanation I gave about the
fellow who was going to buy a downtown condo, lose $6,000 a month
and then sell it in three years.
I admit that I was lax in marrying the two systems without making
the observation that it is easier to be an investor in the  US
because of the short and long term rules.  As Don Suggests, short
term holdings by flippers will attract straight income but
holding for more than a year should create a capital gain.  My
phone has been ringing off the hook however, from Americans who
have bought and sold eight or nine units in the last three years.
Most of my dealings in the past while have been obvious flippers.
Thanks Don
The following is Don's observation:
==============================
Have read your comments on the rental issue and in the past noted
that
you apply the same CRA regulation logic to US rental investments.
US
tax law is different unless one becomes a "dealer" in quickly
flipping
properties.  Holding a property for capital gain is considered as
much
income as a positive cash flow, hence long-term capital gains
treatment
is available for most any property held over 1 year.  Leverage
and
cash-flow is not a normal consideration unless one is in a tax
shelter
entity scheme.
Also, note that Alternative Minimum Tax rates for capital gains
is the
same as for regular tax (5%, 15% & 25%), further complicating the
AMT
calculation but at least giving some relief.
Anyhow, keep up the good work.
Don Starr, CPA
--
Donald L. Starr
Certified Public Accountant
Web:    www.dstarr.com
Email:  don at dstarr.com
Mail:   PO Box 1419
        Blaine, Washington 98231
Fax:    360.332.4005
Tel:    360.332.4971
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