Tax Implications of House Flipping

Author: A.J. Reynolds

Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2028 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card

You have likely seen house flipping shows on television. If not, you have probably heard of people flipping homes for a profit. But what you have not seen discussed on these TV shows or at the local coffee shop, is what are the tax implication of flipping a dwelling.

In general, flipping is a type of real estate investment strategy in which an investor purchases a property at a low price not to use, but with the intention of quickly selling it for a profit.

Where do the transactions go? Will it be Schedule C, Schedule E, Schedule B, Form 8949 and Schedule D, or a combination of these forms? Will expenses and or renovations be capitalized or expensed in the current year? What was your client’s intent upon purchasing the property? Is your client an investor or dealer? Can you utilize IRC Section 1031, Like-kind exchange, related to the flipped home?

Publication Date: May 2025

Topics Covered

• Examine the distinction between a dealer (flipper) and an investor
• Analysis of how costs are handled
• Define Capital Assets
• Explore what forms are used under each scenario
• How to treat sales of flipped properties
• How are costs for properties treated
• How are the profits taxed

Learning Objectives

• Explain how to distinguish what is a Trade or Business under § 162
• Explain Case Law
• Explain how to assess nature and intent of taxpayer
• Recognize distinction between a dealer and an investor
• Identify what forms are used for flipping transactions
• Identify the IRC section that defines by exclusion of what is not a capital asset

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None