Avoiding paying capital gains taxes on a property that I am flipping

[dixon418]

Hello:

I fix properties up to sell. Hence, I experience capital gains. What is the best way to minimize the amount of capital gains taxes I have to pay?

[tagteam · Accepted solution]

If you actually flip properties, on a regular basis, as a source of income you should be asking how you avoid paying taxes on ordinary (earned) income.

If you fit the foregoing profile, the IRS will consider you to be a real estate dealer, your properties will be treated as inventory, any profit (or loss) will be reported on Schedule C (as a business) and subject to self-employment tax; you will not get capital gains treatment.