Flip house capital gains tax

[David McPhail]

My question is what are my options for capital gains taxes? I am going to sell a flip house and profIt about $30k. Do I roll this into a new flip house, purchase investment property or down payment on the purchase of my own residence? Also I live in Texas?

[Linda Weygant]

Once more for the people in the back...

FLIPPING IS ORDINARY INCOME, NOT CAPITAL GAINS.  There are a few exceptions when intent to hold may come into play, but by and large, your flipping income is going to be subject to ordinary income tax and probably self employment tax.

It's not capital gains and you don't get out of the tax through 1031 or investing in something new or anything else.  It doesn't matter if you hold it more or less than a year.

The IRS does not care if you buy a house, fix it up and sell it or you buy bread, lunch meat and mayonnaise and sell sandwiches.  To them, it is the exact same business model.  You are simply buying and selling improved inventory.

According to the IRS, flipping is NOT investing.  For the most part, you have just bought yourself a job, whether you're swinging the hammer yourself or supervising the hammer swingers.