Flipping Houses

Forum|Forum|1 year ago
December 4, 2024
2 replies
38 views

Client is beginning to flip homes and I am wondering how to report this correctly. He is buying and selling in under a year on a few homes to start with. Bought in one tax year and selling the next. Would this be reported on Sch C and how would the income and expenses be reported? Any guidance would be greatly appreciated.

ProSeries Professional

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Jim-from-Ohio

Intuit Community Champion

Goes on a Schedule C. for homes not sold as of year end, the costs are part of year end inventory.

C

CRM2182Author

Level 5

Ok, thank you. It's his first year and he is not selling any this year so would I just list the amount paid for the homes as the closing inventory? And the expenses, such as interest, taxes, materials, tools, etc. Would I just deduct them as I usually would on a Sch C?

Jim-from-Ohio

Intuit Community Champion

So for this year since there are no sales all of those costs you mention would be considered part of inventory.

T

Terry53029

Intuit Community Champion

Is he just flipping houses as an investment or is he buying, and fixing, then selling. When preparing the tax return for a TP who buys and sells real estate, it is important for tax purposes to determine if the taxpayer is an investor in real estate or is operating a business that buys and sells real estate, and does it rise to IRC section 162, a trade or business is an activity conducted with continuity and regularity and has as its primary purpose earning income or making a profit. In determining whether or not an activity rises to the level of being a section 162 trade or business

C

CRM2182Author

Level 5

This I am not sure. I will get with him and do some further research and advise. Thank you.

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