What are the tax ramifications of real estate flipping?
It seems everyone is out to make a quick profit in today’s booming real estate market. The trouble is, it may be quick, but it also may not be as profitable as you first thought. Flipping (buying a property and then quickly reselling it at a higher price) has become today’s hottest investment trend. If you’re not careful, this strategy could land you an additional partner: the Internal Revenue Service. I get a phone call a day on average from people who think they can buy a residential property (not necessarily their residence), fix it up and then sell it and get a tax break as long as they reinvest the profit in another, more expensive, property within a specific period of time. This is simply not true. The old “rollover” provision being grossly misinterpreted above applied only to your personal residence and was phased out and replaced by the new rollover rule in 1997. The current law allows for the tax-free sale of a personal residence if you’ve met certain conditions, but it does a
