I'm a new real estate investor who is starting to flips homes. I'm doing my taxes now and need to know (in a simplified form):
I purchase a house for $50k ($20k borrowed & $30 my own money)
Paid $20k to renovate
Sell it for $100k
Do I write off the $20k loan I need to repay so my net income is $10k or I don't write off the repayment of loan so my net income is $30k?
$100k sale price
$ 50k cost of home
$ 20k renovation cost
$ 20k repay loan
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$10k profit
or
$100k sale price
$ 50k cost of home
$ 20k renovation cost
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$30k profit