The answer is still the same. It depends on what activity you are doing as the taxation of "flipping" houses depends on how you are doing it. Examples:
- If you invest in one house and the owner "flips" it for a profit; to you, it is a capital gain, on your investment. If sold in one year or less, it would be a short term gain. If sold after being held for more than one year it would be a long term capital gain and would be entitled to favorable capital gains rate treatment.
- If you invest in multiple houses and "flip" them for a profit (i.e. you are actively involved in fixing up houses to sell at a profit) you may be engaged in a business. Your business would probably be considered a partnership and would file a partnership return (form 1065). The partnership would issue Schedule K-1 to each partner to report his/her share of the profit on their personal tax return (form 1040).
- If you invest in one or more houses and do not actively participate in the running of the business, then you still only have investments and would report the gain or loss as a short or long term capital gain, depending on when the gain or loss was realized.
- If you are only loaning money (you get your money back regardless of whether the owner makes money or not) and did not participate in the business, the profit should be reported as interest income. You were not at risk.
As indicated at the other links, the line between business and investment can be fuzzy. Keep good records, in case of an IRS inquiry.
