We rehabbed a SF house last year and sold it for nice profit. I have read IRS Publ 544, but am still not certain where we put this income on the 1040. It appears that the IRS wants it to be “Ordinary Income,” since we never rented the house out and we only held onto it for 4 months. Does anyone know for sure ? And if so, what form do we enter the profit on ?
Also, it looks like we will be paying SE Tax on this. Is there a way to avoid this huge bite ?
I had just posted a similar question on the Rehabbing/Landlording forum. I started to do Schedule C, but then 2nd guessed myself that that wasn’t the correct route…I guess I will go back and take another look at it. I just used form 4797 (Sale of Business Property). Either way, the Capital Gains was definitely more than expected!