I still haven't set up the non for profit company but that's why prior of doing that I need to know if I can make a 100% profit of buying and selling houses; that is buy a house under a non profit company, fix the house up, and then sell the house for profit. Thank you!
Not all non-profits are qualified charities under section 501(c)(3) of the Internal Revenue Code. In fact, many forms of non-profit corporation don't qualify for any special treatment under the Internal Revenue Code. These would include homeowners associations, co-operatives, such as agricultural coops, fraternal orders and so forth.
Although it is not clear why you would want to use a non-profit to "flip" houses, you probably could do so. You would be entitled to receive reasonable compensation for your services. Are you a licensed real estate broker? You could receive a commission on the buy and sell transactions. Can you supervise the work in fixing up the house, or perhaps act as the general contractor? You could receive a reasonable fee for providing those services. Can you provide actual construction labor services - doing drywall, painting, electrical, plumbing, etc.? You could receive reasonable compensation for all of those services. But if after you've paid yourself for all the things you did, there is still a profit, you CAN'T draw that out, even if the non profit isn't a qualified charity.
Have you thought about buying the house, living in it during the make over, then selling it when you are finished? If you satisfy the holding period requirements, you are entitled to make up to a $250,000 profit which would not be taxed ($500,000 for a married couple). I have clients who have been doing this for years. This would seem to be a simpler, and yet more profitable way to avoid taxable income on the kind of transaction you refer to.
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No, you can't qualify for non-profit status in this type of business. Non-profits have to be charitable or educational organizations.
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As the first answer states: no, you can't do this. What you want to do is make purely private profits from the activities of a not-for-profit company. That is almost the dictionary definition of a contradiction in terms. In fact, not only can you not do this, if you try to do it you will face substantial penalties, including possibly criminal tax charges, in addition to being assessed for additional tax on the profits you earned but did not report as taxable income.
Word to the wise: don't do it.
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