Builder refurbishes and sells building.

[appelman]

A building contractor refurbishes a building that he owns and sells it at a profit. Is there an SE tax issue?

[ATSMAN]

A similar question was asked before and the answer I think was yes, subject to SE.

[appelman]

Perhaps I should provide more info.

The property is a duplex that the builder has owned for 30 years, living in one unit and renting out the other. A few years ago he took the rental unit off the market and undertook a major remodel. He is now looking to sell the property, and he expects a very substantial profit.

[S T]

Curious on this post, as I have a potential for 2013 which happens to be a loss based on info I have obtained so far

If an investor, not subject to SE? and would report through Sched E, 4797, etc

Or because a RE professional, and would be a Sched C as in "flipping real estate" and then subject to SE

Just trying to obtain more thoughts and guidance

Sandy

[Redneck]

Rental

How long has it been out of the rental market. And is half of depreciated out (30yrs)

[appelman]

Three years.

Original basis fully depreciated. But there have been earlier remodels, and, of course, the current remodel will be a big one.

How long has it been out of the rental market. And is half of depreciated out (30yrs)

[JoshinNC]

My $.02

You have a sale of a personal residence that may qualify for exclusion on the half lived in and you have a sale of an investment property with a basis equal to the amount of improvements made since it was taken out of rental (since you said it was fully depreciated). I don't see how this could be construed to be SE income due to his profession as a contractor because one half is his personal residence and one half is a former rental converted to personal (investment) use.

[TaxGuyBill]

I agree with Josh. He took the words out of my mouth.