Account Closed You’re not splitting up your cap gains into multiple years (except your down payment), which might, or might not, of been an advantage.You’re going to be reporting 5 years of interest (ordinary income) then All of your gain(except the down payment) in the year the principal is paid off.

BYW, if you’re flipping, there is no cap gains, it’s ordinary income plus 15.3% ss/med.

@Brit Hale if there is multiple offers do they just automatically take the highest bid?

Beautiful work @Brit Foshee, I especially like the wood beams in the living room!

Its ordinary income. 

Johnson City is fairly "ordinary" and doesn't have a really high home prices like LA or San Francisco.I found the following sales data:2000 - $35,0002001 - 35,7402004 - $385,0002011 - $249,909The total market appraisal on the taxes (I know that market appraisal isn't the most accurate but its usually in the ball park) is $56,700.Why would someone buy the house for so much more than its worth?

Otherwise, you'll be ordinary like all other investor wannabes.

As for tax savings, flipping properties is a not a good tax shelter -- you're likely going to pay ordinary income taxes at your marginal rate, plus self-employment taxes.

This enables you to defer the payment of your ordinary income, capital gain, depreciation recapture and/or Medicare Surcharge (“Obamacare”) income tax liabilities.When you completes a 1031 exchange you carry over the basic from the relinquished property to the replacement property.

@Brit FosheeI do plan on self-managing the property.