Key Takeaway
The 70% rule in house flipping states that investors should pay no more than 70% of a property's After Repair Value (ARV) minus repair costs. Profits are taxed as business income or short-term capital gains.
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Frequently Asked Questions
What is real estate flipping?
Flipping involves buying an undervalued or distressed property, renovating it, and selling it quickly for a profit. The goal is capital appreciation over a short period (usually under 12 months).
What is the 70% rule in house flipping?
The 70% rule suggests that an investor should pay no more than 70% of the After Repair Value (ARV) of a property minus the cost of repairs. This builds in a margin of safety for unexpected costs and desired profit.
How are flipping profits taxed in India?
If you sell within 24 months, it is treated as Short-Term Capital Gains (STCG) and added to your regular income, taxed according to your applicable income tax slab.
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