turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

I'm a real estate professional and file a schedule C. In 2016 I purchased a house to flip and plan to sell in 2017. Am I able to claim expenses for my flip in 2016?

I'm currently a real estate agent doing typical buy/sell residential. 

Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Best answer

Accepted Solutions
HelenaC
New Member

I'm a real estate professional and file a schedule C. In 2016 I purchased a house to flip and plan to sell in 2017. Am I able to claim expenses for my flip in 2016?

[Answer edited to remove investment treatment 3-1-17 10:31 am PST]

No, generally you can't claim expenses for major renovations/improvements. Property improvements get added to your property's cost basis. 

When you sell the asset, your cost basis gets subtracted from the money you collect from the sale. So instead of paying tax on the full amount, you only get taxed on the profit (the selling price minus the cost basis).

Capital Expenses, Improvements, Renovations: 

Because you are investing in a property with the goal to improve it, the money you pay to buy and repair the house are considered capital expenditures. The IRS allows you to deduct capital expenditures from your taxable income, but only after you sell the property. Generally, the capital expenditures will offset a majority of the profit gained from the flip and reduce your taxable income.

Cost basis  is the original purchase cost of an asset (such as stocks, bonds, or property), plus any adjustments that result from transactions over the period you own the asset. Examples of adjustments would be an increase in valuation due to a property improvement, or a decrease in valuation due to unreimbursed storm damage to the property.

If flipping houses is your business, it would go on Schedule C. This would be a different business than your Real Estate business.

To enter this as business income:.

  • Sign in to TurboTax.
  • Click on the orange Take me to my return button.
  • Type sch c in the search/find bar and click search/find.
  • Click on Jump to sch c.
  • Click on start/edit or Add Another Business.
  • At the Your XXX Business screen:
  • To enter your income, scroll down to Business Income. Click Start/Update. Click Start/Update next to General Income.
  • To enter your business expenses, scroll down to  Business Expenses, Other Common Business Expenses. Click Start/Edit. 
  • Continue with the onscreen interview.

 

Related Information:

View solution in original post

9 Replies
HelenaC
New Member

I'm a real estate professional and file a schedule C. In 2016 I purchased a house to flip and plan to sell in 2017. Am I able to claim expenses for my flip in 2016?

[Answer edited to remove investment treatment 3-1-17 10:31 am PST]

No, generally you can't claim expenses for major renovations/improvements. Property improvements get added to your property's cost basis. 

When you sell the asset, your cost basis gets subtracted from the money you collect from the sale. So instead of paying tax on the full amount, you only get taxed on the profit (the selling price minus the cost basis).

Capital Expenses, Improvements, Renovations: 

Because you are investing in a property with the goal to improve it, the money you pay to buy and repair the house are considered capital expenditures. The IRS allows you to deduct capital expenditures from your taxable income, but only after you sell the property. Generally, the capital expenditures will offset a majority of the profit gained from the flip and reduce your taxable income.

Cost basis  is the original purchase cost of an asset (such as stocks, bonds, or property), plus any adjustments that result from transactions over the period you own the asset. Examples of adjustments would be an increase in valuation due to a property improvement, or a decrease in valuation due to unreimbursed storm damage to the property.

If flipping houses is your business, it would go on Schedule C. This would be a different business than your Real Estate business.

To enter this as business income:.

  • Sign in to TurboTax.
  • Click on the orange Take me to my return button.
  • Type sch c in the search/find bar and click search/find.
  • Click on Jump to sch c.
  • Click on start/edit or Add Another Business.
  • At the Your XXX Business screen:
  • To enter your income, scroll down to Business Income. Click Start/Update. Click Start/Update next to General Income.
  • To enter your business expenses, scroll down to  Business Expenses, Other Common Business Expenses. Click Start/Edit. 
  • Continue with the onscreen interview.

 

Related Information:

I'm a real estate professional and file a schedule C. In 2016 I purchased a house to flip and plan to sell in 2017. Am I able to claim expenses for my flip in 2016?

We are a C Corp and have to file a 1120 We acquired the property in 2016 but did not sell until 2017

I'm a real estate professional and file a schedule C. In 2016 I purchased a house to flip and plan to sell in 2017. Am I able to claim expenses for my flip in 2016?

This is good info. But question when using as a business and as steps described above, where do I enter 1099-S.

I'm a real estate professional and file a schedule C. In 2016 I purchased a house to flip and plan to sell in 2017. Am I able to claim expenses for my flip in 2016?

1099S on a house flip goes in Sch C business income as there are no capital gains when in the business of house flipping.

I'm a real estate professional and file a schedule C. In 2016 I purchased a house to flip and plan to sell in 2017. Am I able to claim expenses for my flip in 2016?

the issue is for those of us who flip multiple houses ("dealers") with sole member llc filing a 1040 schedule c, how does a person differentiate the houses on a single line?  I just got hit with a $377,000 IRS bill because IRS could not tell which properties are included because I use a single EIN. 

 

Additionally, on the gross receipts, I added up all resale prices MINUS all purchase prices, then went through and total each deduction.    There has to be a form to distinguish the individual properties to roll up into the schedule C line 1.     I am researching this now, and have called in for LIVE support to get an answer.  

I'm a real estate professional and file a schedule C. In 2016 I purchased a house to flip and plan to sell in 2017. Am I able to claim expenses for my flip in 2016?

I have the same questions. 

 

1. The title company sends me a 1099s from the sale of a home. Where do I enter that information? As of right now I just have it listed in other self employed income in one lump sum.

 

2. I have two homes that were sold in 2020, how do I differentiate the two homes or do they get lumped together?

 

Thanks in advance

I'm a real estate professional and file a schedule C. In 2016 I purchased a house to flip and plan to sell in 2017. Am I able to claim expenses for my flip in 2016?

1. The title company sends me a 1099s from the sale of a home. Where do I enter that information? As of right now I just have it listed in other self employed income in one lump sum.   If the sole prop has an EIN then that should be on the 1099-S which will marry it to the Sch C.  It is entered as income on the Sch C in any way you wish. 

 

2. I have two homes that were sold in 2020, how do I differentiate the two homes or do they get lumped together?   They can be entered separately for your records however the total only gets reported on the Sch C.   If the number on the 1099-S is your SS# then expect to answer an IRS letter in the future to explain why the sale is on the Sch C and not the Sch D. 

I'm a real estate professional and file a schedule C. In 2016 I purchased a house to flip and plan to sell in 2017. Am I able to claim expenses for my flip in 2016?

Should house flipping go under schedule c or d? I flipped a house. I really do not want a letter from the IRS here. 

 

I have a schedule c business for real estate which I've had for years doing other real estate activities. 

 

I also have a w2 job. 

 

I've read both opinions that it should go on schedule c or d. 

 

I received a 1099s for the property form escrow. 

 

 

I'm a real estate professional and file a schedule C. In 2016 I purchased a house to flip and plan to sell in 2017. Am I able to claim expenses for my flip in 2016?

It depends. Please see this thread for scenarios and answers to your question about whether you would use Schedule C or D when you flip a house.

@speedway121

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies