Level 6

Bought and sold flip property

Forum|Forum|6 months ago
December 27, 2025
2 replies
15 views

My client bought a proerty (house) as a flip property which was an upper fixture. He did all the repairs needed and after 5 months sold it. The propery was never rented. How should I handle this situation?

Can I regard this sale as a rental propery sold?

ProSeries Tax

IRonMaN

Level 15

Doesn’t sound like rental property but it could possibly end up on schedule C. Is this a one time thing or is he in the business of flipping properties?

Slava Ukraini!

A

athaureaux6

Level 7

Schedule C. Taxpayer is considered a Real Estate Dealer. Use the COGS for income and expenses. Remember property does not qualify for depreciation. If bought more than one property for flipping, record them in the COGS to capitalize the improvements for the year you sell it. Even if you do not sell them in the same year you buy it, you can capitalize the expenses in COGS until the year you sell them. Make sure you identify the properties correctly, to avoid confusion. I have 2 or 2 flippers and I do it like that with no problems. Sometimes you will find flippers that they do not want to be considered flippers and do not want to use the Schedule C but the IRS audits these cases at a higher rate. Hope this helps. In other words, it is like having an "inventory" but with houses. Happy new year everyone.

BobKamman

Level 15

"the IRS audits these cases at a higher rate."

That's like saying lightning strikes golfers at a higher rate.

And if he lost more than $3,000 on the deal, the unlikely auditor is going to claim it belongs on Schedule D.

Go with what the client tells you. When he tells you it was the first transaction in a new business, believe him.

T

Terry53029

Intuit Community Champion

The Irs will consider "intent" if you client's intent was only a one time deal then it could be capital gain on 1040 schedule D. If his intent was to start a business then ordinary income on schedule C

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