What Expenses Can I Deduct When Flipping A House?

This is not financial advice, always make sure to discuss with your tax professional before making any decisions.

As a fix and flip investor, it is essential to understand which of your expenses can be deducted when filing your taxes. The expenses you deduct can and will have a direct impact on how much your taxable income will amount to and allow you to plan and budget accordingly for any present and future projects you take on.

The expenses deducted for fix and flips are similar in nature to the deductions that are made by self-employed business owners. The deductions you are able to make will highly depend on whether the IRS will see your flipping as a business or an individual investment.

These are the expenses that you can expect to deduct when flipping a house of your own:

House Flipping Tax Deductions

Fix and flip investors can deduct certain expenses before their property is renovated, while some deductions can only be made after it has been completed and sold. Capital expenditures are one such expense, which will include the total cost of purchase and renovation. Other deductible expenses investors can depend on include vehicle or travel expenses, office expenses, the cost of building permits and even loan interest. Travel expenses for fix and flips include the gas used by the investor traveling to and from the property and wear and tear on their vehicle.

Similarly, office expenses are deductible and will include any rent the investor has to pay for a workspace, their utilities, and any stationery supplies they use over the course of their project. If you make use of a real estate agent to find a property, the commission that is paid to them is deductible. Your business expenses, legal fees, and accounting fees can also be deducted.

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