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First, you will need to determine if you are a real estate investor or a real estate dealer.
Generally speaking, real estate investors purchase real estate with the intention of holding their properties and gaining a financial return; real estate dealers buy and sell real estate as part of their everyday business. It all comes down to the intent behind the property purchase. Even if you originally purchased the property to hold, but ended up selling it sooner, it does not mean that you are a dealer.
If you are a real estate investor, then the "flip" will be reported as a sale of an investment asset.
The costs of obtaining, building, or any payment to contractors will be added to the cost basis of the house and used against the sales price to reduce capital gain on the sale.
If you are a real estate dealer, then you will report the "flip" on Schedule C.
The sales price will be your gross income (general income in TurboTax) and basis will be your cost of goods sold. This income will be subject not only to income taxes at ordinary income tax rates, but also self-employment taxes. You will also need to upgrade your TurboTax software to Home & Business.
To enter this as business income:.
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