In the last 5 yrs I’ve bought and sold 4 houses after remodeling them. Closing on purchase shortly. My Question is, houses are in my name, sure I put them in LLC or C Corp. I haven’t been hit with taxes yet. More a hobby than business what do u subject?
Thanks for your question. If you’ve been flipping houses for profit, even if it is a hobby, the IRS will consider any profits as a taxable event. When you say you haven’t been hit with taxes, are you claiming this income on your tax return? You’ll want to make sure so you don’t get hit all at once with a sizeable tax bill, plus potential penalties. You’ll also want to have detailed records of all the expenses incurred in buying and flipping the properties to get the maximum deductions.
As far as being a sole proprietor or forming an LLC, that is partially tied to your tolerance for risk. I’d advise you to talk both with a tax accountant and attorney to make the best choices based upon your goals. My bigger concern with the information you’ve provided is that you may owe the IRS taxes on profits from your flips, even though you’re only doing it as a hobby.
Best of luck to you.