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Purchased, rehabbed and sold house

Forum|Forum|3 years ago
March 28, 2023
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I purchased a house in 2021, rehabbed it and sold it in 2022.

I am a Realtor so represent many others in similar transactions, but only the one rehab myself, under my wife's name.

Where/how do I claim this?

Thanks!!

TurboTax Home & Biz Windows

Best answer by DMarkM1

@DianeW777

@DMarkM1

Understood and thank you for your reply!!

Please correct me if I am wrong, but wouldn't it be to my advantage to include it with regular business activity?

Not typically. As an investment self-employment taxes do not apply; as your business they do apply to your gains.

The facts and circumstances in your situation determine which form to file the transaction on.

You had mentioned "in your wife's name" who is not in the real estate business. So it could be her one-time investment project on a schedule D. On the other hand if you are really the one working this project as part of your real estate business then it is a Schedule C transaction.

DMarkM1

Assuming you or your spouse are not in the "house flipping" business which means just an occasional transaction and you have other income sources, you will enter the sale as an investment sale which will be reported on a schedule D.

In the "Wages and Income" section scroll to the "Investments" topic. There you select the "Other" tile for "Second Home." You enter the sale information and your cost basis will be what you paid for the property plus any improvement costs. You will also have the opportunity to enter any selling expenses (for example broker fees, etc).

If you held the property more than 1 year the gain will be long-term and be taxed at capital gains rates. If less than 1 year, it will be short-term and taxed at ordinary rates.

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J

jojobobAuthor

Thanks @DMarkM1

Since I am in the Real Estate 'business' would it be an option to just include it all in my regular self run business?

D

DianeW777

Yes. Since you are in the real estate business, and if you consider yourself as a material participant as a real estate professional which would include flipping a house then you should report it with your business activity on your tax return. Ultimately you must decide if it was an investment or part of your real estate transactions.

If flipping a house was a one time action and not your regular business, there could be an argument for selling it as an investment.

@jojobob

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