If an LLC owns a real property for 2 years and then sells it, are the profits deemed "business income" or "capital gains"?

jessies-friend · ‎June 4, 2019

I sold an SFH (Single Family House) owned by my LLC (Single member, Disregarded Entity; NO other income/activity in that LLC) in 2016, for a Gain$. The house was purchased more than a year ago (for repairing and renting out purposes, but never got around to repairing it). In essence, the house was flipped for a gain.

So, If a single-member LLC owns a property for more than a year and then sells it, are the profits deemed "business income" or "capital gains"?

MinhT · ‎June 4, 2019

Unless you are a dealer in real property, profits from the sale of real property are taxed as capital gains (long-term if you have held the property for more a year).

Please read this article for more information:

http://www.snydercohn.com/2012/09/is-it-capital-gain-or-ordinary-income/

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jessies-friend · ‎June 4, 2019

Thank you, TurboTaxMinhT, for your prompt response. I concur. However, Can I "elect" to report it as 'Biz. Income' rather than Cap. Gains (I have my own reasons to elect to do so)? If so, how do I do it in TurboTax? TurboTax currently sees this as Cap Gains; which is, in accordance with the Answer. Thanks.

MinhT · ‎June 4, 2019

This is not an election. If you bought the property with the intent to resell it at a profit, then the gain is taxed as ordinary income (like real estate dealers do).

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If an LLC owns a real property for 2 years and then sells it, are the profits deemed "business income" or "capital gains"?

Business & farm

Business & farm

Business & farm