It depends. If you are actually in the business of flipping houses, then your contractor expenses would be included on your return as an expense on Schedule C in the year you paid the contractors. Your houses would be listed as inventory on your return. If this is your first flip and you are just testing the waters, then you would not report on Schedule C as a business.
If you are not considered to be in the business of flipping houses, (ex. this is a one time deal that you are doing) then the amounts you pay to the contractors would be added to the cost basis of the house when you sell it. You would NOT deduct the money you paid to the contractor this year. You would wait until you sell the house. This would apply if you are only doing this one time. Then your income and expenses would be reported on Schedule D in the investment section of TurboTax.
Read the post by Hal-Al in this link for more information.
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