Tax lien foreclosure and then flip the house?

[Sophie Wang]

Hey guys,

I have been buying tax liens for a few years, and recently three of them passed the redemption period and I started the foreclosure process to apply for the deed. Just try to make plan here, if I do get the deeds, and then sell the property, is it considered a capital gain or earned income for tax purposes? And if I hold the property for a while before selling it, or if I fix it up and then sell it, do these change what type of tax I would pay ( long term capital gain, short term capital gain, ordinary income)?

Thanks! I'd love to hear your opinions.

Sophie

[Chris Seveney]

@Sophie Wang

1. Always talk to your CPA

Not an account but if your goal was to flip a property then it’s earned income.

The way around it is potentially to consider it a rental and hold it for 2 years before selling it but again speak to your CPA