Question 1

What taxes do you pay flipping houses?

Accepted Answer

House Flippers generally pay ordinary income taxes on net profits in a Calendar year.  These taxes include Federal Income Tax, State Income Tax, & Self Employment Taxes.

Question 2

Wait, I Thought House Flippers Pay Capital Gains Tax?!

Accepted Answer

House flipping income is very rarely taxed as capital gains.  In the vast majority of scenarios, you will be paying ordinary income taxes based upon your individual income tax rate.

Question 3

How Much Tax Do You Pay Flipping Houses?

Accepted Answer

The amount of tax you pay will depend on your individual ordinary income tax rate and tax bracket.

Federal Income Taxes are paid based upon your Federal Income Tax Brackets

Self Employment Taxes are paid at 15.3% of Net Profit up to $118,500.

State Income Taxes are paid based upon State Income Tax Brackets.

Question 4

When Do you pay taxes Flipping Houses?

Accepted Answer

Houses are considered inventory and project costs are classified as cost of goods sold.  You don’t pay income taxes on the ‘goods’ until the goods are sold.  For example, if you buy and rehab a house in 2018, but don’t sell the property until 2019, you would pay income taxes on the profits in 2019.

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