Tax Question: Capital Gains or Ordinary Income?

[Jonathan Santiago]

I just watched a video online of someone explaining why he would never flip a house. He basically said the reason is because if you flip a house it is considered ordinary income tax + self-employment tax which ends up being at least 30% tax vs. a 15% long-term capital gains tax. Is this true? Does it vary by state?

I have a property in MA I've been thinking about selling that is not my primary residence and I have not owned it for 2 years and I was under the impression I'd be liable for capital gains tax on any profits made not ordinary income plus self-employment tax. Any flippers or CPAs who could give me clarification on this would be greatly appreciated.

[Lance Lvovsky]

Intent.

That is the key. Your property in MA... if intent at acquisition was not to flip, then it is held for investment, and you would likely qualify for capital gains tax. Double check with your CPA who ultimately will be supporting the position on a tax return. Does not sound like a flip.