The popularity of house flipping has increased dramatically in recent years, so you’re likely to have clients who are interested in this activity, or who are already doing so.
Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.
Q: How do you know who is a qualified intermediary?
A: A qualified intermediary is a person who meets the requirements under specific sections of the U.S. Internal Revenue Code (IRC) to perform certain activities.
Q: What is the difference between a flipper and a rehabber?
A: Flippers may or may not make improvements to a property before selling it, whereas rehabbers always make improvements before selling.
Q: Can investors depreciate their property?
A: No, investors cannot depreciate their property unless it is placed in service as a rental property.
Q: For an installment sale, should Form 6252, Installment Sale Income, be reported when the sale occurs or in the tax year when the first payment is collected?
A: Form 6252, Installment Sale Income, should be filed in the year the sale occurs.
To learn more about preparing taxes for house flippers, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial.
About National Association of Tax ProfessionalsThe National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.
The NATP headquarters is located in Appleton, WI. To learn more, visit www.natptax.com.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing.