Discussion:"House flipping" business entity choice
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Discussion Forum Index --> Tax Questions --> "House flipping" business entity choice
| 16 May 2007 | |
| With the popularity of show such as "Flip this House," I am not surprised that I have had calls from a couple of people who want to start businesses buying old houses and rehabbing them. I would like to make sure that before I meet with them, that I have considered all of the issues that may face them.
It sounds like the first client I am meeting with is going to buy maybe one house per year to fix up and sell. There are 4, unrelated people will be the owners. They have met with a lawyer and the lawyer suggested an LLC (taxed as a partnership). That sounds ok to me. Any comments? Also, is the house an investment or inventory (Capt gain or ordinary income)? SE tax? Thanks. | |
| May 16, 2007 | |
| For more information on this subject, see Flipping Real Estate. Feel free to add any comments, information, or links to that page as it's a work-in-progress.
- Tim Doyle, TaxAlmanac Moderator - Talk to me 09:57, 16 May 2007 (CDT) | |
| 16 May 2007 | |
| Intent is the key. Practice is the backup.
If they do the work themselves and have wages, domestic production deduction would result. | |
| 16 May 2007 | |
| "people who want to start businesses buying old houses and rehabbing them."
Someone who flips one house might be an investor. If the activity becomes regular it may well become a business and hence subject to SE tax. | |
