Question:

How does Capital Gains Taxes work when you are flipping houses?

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what is the rate? does it make flipping houses not worth it?

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  1. If you sell within a year or less, that's taxed at your regular tax rate.

    If the time you buy and sell is more than a year, you will be at a long-term capital gains tax rate, which is less.

    However, if you live in that house for at least 2 years within the past 5 years, prior to it being sold, you can get up to $250,000 capital gains tax free if you are single, or $500,000 if you are married.  This is assuming you have not used up this benefit for another house within the past 2 years or so.

    This is at the federal level.  It may be different at the state level for the short-term and long-term tax rates.

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