Sch C vs Investment Property

Forum|Forum|4 years ago
March 28, 2022
1 reply
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Client inherited 4 properties. My intention is to rehab/remodel them and then sell. Would you recommend that I create a (Flipping) business for the properties until they sell or just retain them as inherited/investment properties until rehabbed and sold?

I am not sure which is more beneficial for tax purposes. All are expected to be disposed of via sale within 3 years.

All responses are appreciated.

ProSeries Professional

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Best answer by Just-Lisa-Now-

Couldn't an argument be made that, once inherited, the TP's intention was to rehab and sell. Does it really matter how the property was obtained? It is investment income, intended for gain on value. My question is would it be more beneficial, tax wise, for the TP to run it through a Sch C business?

Sch C you're looking at profits subject to SE taxes. As opposed to capital gains for selling an investment.

Sch C, all the rehab costs are part of inventory until the house sells, so Im not seeing much benefit from going the Sch C route...what are you trying to accomplish?