Taxation of Rehabs that Cross to Next Calendar Year

[Steph C.]

Hi BP,

I have a question that I'm sure many of you can answer.

We purchased a home to rehab last year in an LLC. The rehab was completed last year, but the house did not sell by the end of 2011. If the house had sold in 2011, I realize the taxes due on the profit of the sale would have been due. However, since we held the property into 2012, how does this work tax wise? It's technically not a "buy and hold" property, but for 2011's tax purposes, it it taxed that way?

Any and all comments would be appreciated!

Although I will be discussing this with a CPA as well, I like to have an understanding of how this works, especially from those that have been there, done that.

Thanks in advance,
Steph