The Current State
Americas Housing Alliance, LLC
House flipping is an activity of buying properties, such as homes, and reselling them at
a profit after a renovation and makeover within a 12-month period. The investment
activity had taken a backseat in 2014, but real estate investments have seen it grow.
The shares of flipped homes have gone up 20% during the first three months of 2016.
The upward trend shows that it has risen 3% more than the same period in 2015.
In Baltimore, Buffalo, New Orleans, San Diego and Seattle, flipping has shown peaking
sales at around 7% — a far cry from ten years ago, when investors flipped properties
with risky mortgages. But why is flipping coming around again?
Real Estate Value and Taxation
A banker states how there are a lot of investors who view real estate as a venture
more profitable than trading stocks. Why is this so? Flippers find leisure in the
physical element of real estate, as opposed to the stock market. Since property is
something real, investors see a house, its neighborhood, and can immediately tell the
potential it has. The problem here lies in an investor’s strategy, wherein they may
encounter problems with the Internal Revenue Service.
In dealing with house flipping, there exists confusion with regards to monetary
provisions. Real estate investors purchase a property, renovate it, and then sell it at a
higher price than its original purchase value. With the profit, investors will use the
money and buy another property for more than what they had already sold. Known to
many as the “old rollover provisions,” this rule no longer applies to today’s housing
market. The current law allows, in a lot of cases, for the untaxed sale of a personal
This regulation works well for primary residences, but for investment properties, an
investor can find trouble with taxes — as they can be more costly. One can flip for a
profit, but the corresponding taxes, such as those with condominium investments, can
greatly reduce their profits.