Capital gains on one-off house flip

Forum|Forum|2 years ago
March 6, 2024
1 reply
5 views

I bought a house in October 2023, which included a second lot.

I'll be selling the house before I've owned it a year. I'll sell the lot after owning it for just over 12 months (October 2023 to November 2024).

The house is a one-off flip. I won't be buying any more houses to flip them. I think I'll be able to pay capital gains on both the house and the lot, rather than treating the profits as active income, if I'm only doing it once, although I think this is a bit of a murky area.

If that's correct, then I'd pay short-term capital gains on the house profits and long-term gains on the lot profits. Is that correct? And when the IRS stipulates that you must own a property for at least a year in order to pay long-term capital gains, is that a calendar year or the actual length of ownership in months?

Thanks for any thoughts you might have on this.

Anonymous_

Level 15

https://www.law.cornell.edu/uscode/text/26/1222

More than one year = long-term.

RaineBAuthor

Level 3

Thanks for the link.

Any thoughts on the IRS treating my profits from a house held short-term (and not lived in by me, not rented, and not used for business) as an investment, rather than normal income? It seems this is a bit of murky area.