Investments in single family houses

[Zoey]

Where would you put houses purchased on the tax return, if their not ready to be sold?

[taxea]

what was the purpose for purchasing these homes?

[Zoey]

Investing in Buying & Selling Houses

Client have Settlement Statements showing the purchase.

[Lion]

Are they Inventory to be sold? Then, Inventory.

[Zoey]

Buying & Selling Homes

Are they Inventory to be sold? Then, Inventory.

I was told that I should keep the records and not put the four homes on the return until their ready to be sold. Is that correct information, if not how do I include it as inventory on the tax return? I appreciate all the help

[sandigi]

It depends

I was told that I should keep the records and not put the four homes on the return until their ready to be sold. Is that correct information, if not how do I include it as inventory on the tax return? I appreciate all the help

I think it depends on the situation. If your client has been buying and selling homes and is in the business of buying and selling homes, won't this be considered self-employment income if you have inventory of homes? Is there a possibility he might rent out one of the houses if it doesn't sell? I think you should look at the number of years he has been doing this and the number of homes in his "inventory" before you declare he has "inventory".

I have a client who is a real estate investor. Some years, he buys, fixes up and sells a property or two. Sometimes, he will keep it and rent it out. His rental income is on a Schedule E and his sales are on Schedule D. Regular income and capital gain income.