Tax Differences Between Flipping & Renting | Passive vs. Active Income
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- Опубліковано 6 лип 2022
- In this video I discuss the tax differences between flipping property and renting property. Flips are generally considered earned income and subject to federal, state, social security and medicare taxes whereas rental income is subject to federal and state income tax only.
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#flippingvsrenting #flippinghouses #rentalproperty
Great info. Thank you!
Awesome information and well explained
Thanks Rosa - glad you found it helpful!
👍
How long does it need to pass for the property to be treated as passive before selling it? Lets say purchased a property , renovated and rented for a year and then sold it. Would it be treated as flip or passive?
What if you refinance the flip property, then keep it as a rental, and take that money out to use for another property? Would it still be considered an active property in the beginning since you’d be holding it afterwards and using the income to buy another home?
If you keep it as a rental, the rental income is still passive income and isn't subject to SE tax. In that scenario, you never actually flipped it because you never sold it, so there's really no active flipping business income to report in any case. It's just rental income.
Wouldn't a flip of the house be a capital gain on Schedule D?
Because you have a profit motive, so use Schedule C.