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Sales of Property

The facts are as follows:

  • I bought a house in September of 2021 for $250K with the intention to make major rehab repairs and then flip. This house was in a really bad shape and needed a lot of work.
  • I was finally able to evict the inhabitants of the house in September of 2022. 
  • I started making repairs to the house in January of 2023 and finished everything by September of 2023. My total cost in the house from September 2021 to September 2023 was $200K. 
  • I did not take any depreciation on this house or any tax deductions.
  • I hold a real estate license and I am a part-time realtor and I spent a lot of time in selecting the contractors to do the work and also did some of rehab work myself.
  • I sold this house in September 2023 for $500K; thereby making a gain of $50K. 

My questions are as follows:

  • What is the correct step by step process to get this entered in Turbo Tax and also what is the correct tax treatment for this?
  • Is my gain $50K? My thought process was that I could include all my expenses on this house since I bought it in September 2021 to finally selling it in September 2023. In addition, given that I did not take any depreciation or other tax deductions for my expenses since when I bought it then my cost basis in simply all my expenses without any recapture adjustments etc?
  • Would this information simply go in Part III of Form 4797? And in the description I can call it "Rehabilitation and Sale of House"?

 

Thank you in advance for your help!

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2 Replies

Sales of Property

Please can one of the experts here help with this! I am in need to get my return done as soon as possible and take it to the post office in the next three hours. @Critter-3@AmyC@AmyC 

AmyC
Expert Alumni

Sales of Property

You bought a house $250k. Added $200k in improvements and sold it for $500k. It goes on Sch D as sale of second home or other home. You can also add the allowed closing expenses from the purchase and sale.

 

Reference:

 Where do I enter the sale of a second home, an inherited home, or land on my 2023 taxes?

About Publication 544, Sales and Other Dispositions of Assets

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