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.
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@abctax55 wrote:
My intention ??
Yeah, I totally love it when my clients let me sell their properties (and keep the proceeds of course). 🤣
Sorry, typo...client's intention. The "I" refer to conversation from client.
# Lisa...care to comment?
Many times when someone inherits a home it needs substantial work in order to sell it. This wouldn't be considered a "flipping business" and put on Sch C.
Could you elaborate? This involves 4 separate properties, all in need of major rehab. Is it just because the property was inherited and not purchased by the client? There is a basis on the properties.
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?
Thanks...that really helped and was what I was looking for.
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