Finance category
Mortgage, loan, investing, tax, and money calculators.
Flip Tax Calculator
Tax eats a big chunk of flip profit. This calculator sizes federal + state tax under short-term capital gains or dealer treatment, and shows net after-tax profit from the deal.
Net after tax
$26,460
Pre-tax gain
$42,000
Total tax
$15,540
Effective tax rate
37.00%
How the math works
Flips held less than a year are taxed as short-term capital gains (ordinary income rates). Dealer status — frequent flippers treated as a business — adds self-employment tax (15.3%) on top of income tax. Long-term hold (over 1 year) drops federal rate to the 15-20% LTCG bracket.
The IRS evaluates dealer status based on number of flips, time spent, and income source. 2-3 flips per year often trigger dealer treatment. S-corp or LLC election changes SE tax treatment — consult a CPA for tax planning, especially as flip volume grows.
How to Use
- Enter sale price, purchase cost, rehab, and selling costs.
- Enter months held.
- Enter federal and state marginal tax rates.
- Indicate dealer status — typically yes if 2+ flips per year.
Frequently Asked Questions
What triggers dealer status?
No bright line in the tax code — IRS considers frequency, intent, time spent, and whether flipping is primary income source. 2-3+ flips per year, full-time attention, or operating as a business typically triggers it. Once dealer, flips are inventory (ordinary income + SE tax).
Can I hold longer to get LTCG?
On a rental property held 12+ months, yes — LTCG applies (15-20% federal). On a flip (inventory), dealer status means LTCG never applies regardless of hold. Plan your category carefully.
What about 1031 exchange on flips?
Not available — 1031 requires held for investment or business use, not inventory for resale. This is one of the biggest tax traps for flippers converting to rental investors; plan the transition carefully with a CPA.
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