Where to enter a flipped home (<1 year ownership) as 'dealer' TT Home & Business?

Forum|Forum|6 years ago
February 19, 2020
2 replies
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I guess it is considered 'sale of business property' ? The fact it is residential was throwing me off, but I think they just mean an investment, rather than something I'm using as a residence?

TurboTax Home & Biz Windows

HelenC12

First, you will need to determine if you are a real estate investor or a real estate dealer.

Generally speaking, real estate investors purchase real estate with the intention of holding their properties and gaining a financial return; real estate dealers buy and sell real estate as part of their everyday business. It all comes down to the intent behind the property purchase.

Even if you originally purchased the property to hold, but ended up selling it sooner, it does not mean that you are a dealer.

If you are a real estate investor, then the "flip" will be reported as a sale of an investment asset.

The costs of obtaining, building, or any payment to contractors will be added to the cost basis of the house and used against the sales price to reduce capital gain on the sale.

Open your return in TurboTax.
In the search box, search for sold second home (use this exact phrase) and then click the "Jump to" link in the search results.
Answer Yes on the Did You Sell Any Investments in 2018? screen.
If you land on the Here's the investment sales info we have so far screen, click Add More Sales.
Answer No to the 1099-B question.
On the next screen, select Second Home (choose this also for inherited homes) or Land. Click Continue.
Follow the on-screen instructions to completion.

If you are a real estate dealer, then you will report the "flip" on Schedule C.

The sales price will be your gross income (general income in TurboTax) and basis will be your cost of goods sold. This income will be subject not only to income taxes at ordinary income tax rates, but also self-employment taxes. You will also need to upgrade your TurboTax software to Home & Business.

To enter this as business income:.

Sign in to TurboTax.
Type sch c in the search/find bar and click search/find.
Click on Jump to sch c.
Click on start/edit or Add Another Business.
At the Your XXX Business screen:
To enter your income, scroll down to Business Income. Click Start/Update. Click Start/Update next to General Income.
To enter your business expenses, scroll down to Business Expenses, Other Common Business Expenses. Click Start/Edit.
Continue with the onscreen interview.

Source: RayW7

Related Information:

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blueangel12

Where do you put the purchase price of the home on turbo tax? Expenses?

DaveF1006

You would enter this an an investment sale. Here is how to enter.

Once you are in your tax return, click on the Personal" tab in TurboTax Home & Business.
Next click on Personal Income" in TurboTax Home & Business)
Next click on “I’ll choose what I work on
Scroll down the screen until to come to the section “Investment Income”
Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’
The first screen will ask if you sold any investments during the current tax year (This includes any sale of real property held as an investment property so answer “yes” to this question)
Since you did not receive a 1099-B, answer “no” to the 1099-B question
Choose type of investment you sold - select everything else
What type of investment other
How did you receive the investment. Indicate you purchased it.
On what did did you receive this investment. The date of purchase of the flipped home.
Some basic information:
1. Description – Usually the address of the property sold
2. Sales Proceeds – The amount you received for the sale
3. Date Sold – Date you sold the property
4. Cost or other basis (This is where you put the purchase price of the home)
If you had an investment loss, on the question of "Did you use this property for business or investment?" If the inherited house was not used for any personal use (no family member lived in it or used it between the time of inheritance and the sale), you will answer that this was for investment. This will allow you to take a capital loss if you receive less than what you paid for it.

Remember to add the closing costs from the settlement statement you received when you purchased the house. You may also add improvements you made to the home prior to selling it. Also deduct closing costs from the sale of the property as these will lessen the capital gains from the sale.

This may have been more information than you needed but I included just in case if you try to report it in any other manner because flipped properties are strictly for investment purposes. The answer to your specific question is in step 12 under cost and other basis. I hope I didn't inundate you with too much information.

@blueangel12

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Carl11_2

Employee

If you business, regardless of the type of business (SCH C business or corporation) is in the business of buying/selling homes and you do not rent them out for one single day or live in them, then the houses are inventory. Period.

So if this is a SCH C business you'll report it's acquisition as inventory, your fix-up costs as materials/supplies, which will include the cost of labor if you pay employees or a third party contractor to do the actual work.