My husband and I bought a house to fix up and resell, not to live in. What is the difference in tax rates when you own a property for a year as opposed to less than a yr?

[jmartin52414]

I know the tax rates can vary based on different areas. Our zip code is 17304 and the property we are selling is 17222.

[Anonymous_ · Accepted solution]

The federal income tax rates do not vary based upon zip code.

Short-term capital gain (capital assets held for one year or less) is taxed at your ordinary income tax rate.

Long-term capital gain (capital assets held for more than one year) is taxed at capital gain tax rates which are generally 0%, 15%, and 20% depending upon your taxable income.

See https://www.irs.gov/taxtopics/tc409

Note that if you are conducting this type of activity, flipping houses, with relative frequency and on a short-term basis, the IRS might consider this to be a business and the houses to be inventory. In that event, the gain would be considered ordinary income and subject to self-employment tax.