First flip question about taxes
I purchased a home and currently have it on the market for sale. I have an offer but they don’t want to close until 1-10-19. My concern is on how this might affect me on my taxes. All of the expenses were made in 2018. How should I manage these flipper charges when the property sells? Will I need to make all the deductions in 2018 on my taxes or when the property sales in 2019. Will these expenses be okay to carry over to 2019 tax year when property sells?
I sincerely appreciate your advice. I’m a realtor and the taxes are always a challenge.
Your expenses related to the property should be deducted as part of your adjusted cost basis when the property is sold.
When the property is sold, you will show the selling price and subtract your cost basis, resulting in your gain or loss. Your cost basis includes the purchase price of the property, plus repairs and improvements and selling costs. Thus, you will take deductions related to this property in the year when the property is sold.
Hope this helps!
Enrolled agent and staff writer for FitSmallBusiness.com
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