Tax Implications of Flipping Houses

[Bette Hochberger]

Hi all!

Flipping houses can be profitable, but it's essential to understand the tax implications:

1. Ordinary Income: Profits from flips are typically considered ordinary income, not capital gains.
2. Self-Employment Tax: If flipping is your business, you may owe self-employment tax.
3. Expense Deductions: Deduct direct expenses like materials, labor, and selling costs.
4. Holding Period: Short-term vs. long-term holding affects tax treatment.

What challenges have you faced with taxes when flipping properties?