Flipping homes, taxes, capital gains

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Flipping homes, taxes, capital gains

Simon Obas
Rental Property Investor · Member since 2019 · 199 posts · 42 votes

Peace. I'm interested in knowing how you all house flippers are filing taxes. I flipped a home in January and selling another one in 2 weeks. I purchased both homes under my LLC and will sell them under my LLC too. I'm hearing I should file taxes as an s Corp to avoid/lessen capital gain taxes. I will go speak to a cpa for sure however, I'm curious as to what other investors are doing. Any information is greatly appreciated.

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  • Bill HamptonBusiness Member
    Accredited Investment Fiduciary, AIF®, Financial Planner, Tax Strategist, Real Estate Investor · Atlanta, GA · Member since 2012 · 2k+ posts · 977 votes
    5y

    Simon, 

    When you flip houses the profits are taxed as ordinary income not capital gains. There are ways to minimize taxes if you work with a tax professional. 

    I recommend finding an accountant that specializes in real estate taxation for assistance. You may want to consider working with your accountant remotely to expand your options.

    I would also recommend looking for a tax strategist who is willing to work with you throughout the year, not just when preparing your tax return. You want an accountant that can help you strategize and who is responsive when you want to know the tax consequences of the decisions you are making throughout the year.

    Good luck and let me know if I can be of assistance.

    404-482-3170
    Hampton Tax and Financial Services LLC4.7106 Reviews
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  • Michael PlaksPro Member
    Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
    5y

    How do you rehab houses? Any information is greatly appreciated.

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  • Lance LvovskyPro Member
    Accountant · Fort Lauderdale, FL · Member since 2013 · 1k+ posts · 753 votes
    5y

    @Simon Obas

    Are you recording the house flipping as inventory. You need to understand the proper classification on the balance sheet.

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  • Simon Obas
    OP
    Rental Property Investor · Member since 2019 · 199 posts · 42 votes
    5y

    @Michael Plaks I hire a GC and pay him from my business checking account. I occasionally use Zelle too.

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