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Visitor III

Holding Investment property more than one year

I am very familiar with  holding real estate long term as rentals. I own several. But I have never held a flip property across a tax year before.

In January 2015 I bought a property to flip. I never rented it or had income from it. I rehabbed it myself, serving as the general contractor and performed much of the labor. I hired electricians, plumbers, roofers as needed. I sold the property in January 2017 as at a nice profit.

When I did my 2015 and 2016 taxes, I saw no place for  that property on schedule E or any other schedule. I had no need to depreciate it and I had no income from it. I took no deductions for my expenses (which included taxes, insurance, materials, labor, and more). 

Now I plan to take all those expenses as a deduction from my basis to reduce my taxable profit. Is this right? Or is there any exclusion for taxes, insurance and such? I am not deducting anything for my time and labor - only what I paid other people.  

Since I held it two years, these should be long term capital gains, right? 

Was there some schedule I should have reported this property on while I was holding and repairing it?

 

1 Comment
TurboTax Specialist

Holding Investment property more than one year

Yep, you are on the right path.

 

If you are in the business of flipping houses, then you report all income on a schedule C as business income. If you are not in the business of flipping houses, then you report as a sale of a capital asset (long term in your case) in the Investment section.

 

Add all of your rehabbing and carrying costs incurred to the property basis.