Do You “Flip” Real Estate — The IRS is watching

Do you “flip” real estate? The IRS is watching.  Did you know that the IRS has two ways to categorize your proceeds of the sale for tax purposes, one of these categories will increase your tax bill by 15.3%.   The two categories are Real Estate Investor, the other Real Estate Dealer.    The IRS makes each dealer/investor determination based on the “facts and circumstances” surrounding the sale(s).  Some of this circumstances: does the flipper hold a real estate license, the number of sales, do you have employees?   As outlined in Tierra Grande Magazine article [January 2015, Dr. Stern] it is good practice for those involved in “flipping houses” to review your tax liability with a qualified tax or real estate attorney.

If you are considering investing real estate, contact me for a consultation on current market conditions in Central Texas.

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