Taxes on Building and Selling Homes

[brl24]

What is the name of your state?AZ

I am buying a lot or two to build a couple houses which I intend to sell. I've heard that because I am building them with the intention of selling them, that I am considered a dealer, and will be taxed much higher, than if I were just building the house to rent, then sold it down the road. Any suggestions or advice on whether this is true, and if it is, then are there any ways around it? Thanks.

 

[abezon]

The key is whether you're doing this as a business, or just as a 1-time activity. If this is a business, you report income & expenses on Sch. C. If it's not, you report income & expenses on Sch.D.

Talk to a tax pro in your area about what kind of records to keep & whether you could structure the deal to avoid some capital gains taxes by living in the houses before selling them.