Income Tax for Real Estate Developer

[Navid T.]

Hello Guys,

Let's assume I managed to purchase a land for $ 100 k and I build a 10 unit apartment complex ( construction cost = $ 900 k), and let's say it takes me 2 years to complete the project (The ROI is 100%). Then I decide to sell 5 units of this project and I net $500 k after all expenses, but I decide to keep the other 5 units for more than a year. As far as I'm aware, I have to pay regular income tax on the $ 500k. After a year, I decide to sell the rest of the units and I net another $ 500 k. Can I pay capital gain on this $ 500 k or I still have to pay regular income tax on it? (which is going to be about 20% based on my income tax bracket)?

Please clarify this scenario for me.

Thank You