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How do I report residential property flipping in TurboTax?

by TurboTax• Updated 1 week ago

Property flipping is buying real estate and selling it for profit less than a year later. 

Residential property flipping is classified by the CRA as self-employment income. A loss taken on a given flipped property is deemed to be nil for tax purposes.

See the CRA for what’s considered a flipped property.

Select your product and follow the instructions to add your flipped property income in TurboTax.

  1. Answer all the initial interview questions if you haven’t already, and if you have a flipped property, do the following,
  2. From the left menu, select Income, then Residential Property Flipping.
  3. On the We need more info about the property you sold screen, select Yes for the two buttons (only one button if you indicated you sold your principal residence in Step #1). 
  4. If none of the listed exceptions apply to you, check the box for None of these apply, and select Continue.
  5. On the Did you have any self-employment income or expenses? screen, select Yes and proceed. 
  6. On the What category is your self-employment work? screen, select Business,  then select Continue.
  7. On the Tell us the type of self-employment work you do screen, enter a brief remark such as property flipping and select Continue.
  8. On the We need a little more info screen, select Other activities related to real estate and then select Continue.
  9. Continue to answer the questions about your flipped property income and expenses.
  10. On the What was your self-employment income? screen, enter the sale amount of your flipped property and select Continue.
  11. On the Did you sell products that you bought or manufactured screen, select Yes.
  12. For Total purchase during the year, enter the purchase price of your flipped property and select Continue. 
  13. On the Next up, claiming your expenses screen, if you have additional expenses from flipping the property, select Continue and proceed to answer the questions about the expenses. Otherwise, select Skip expenses. 
  14. If you incurred a loss, on the Your Self-Employment or Business Summary screen, for Is this loss from the sale of flipped property? select Yes. Important: as noted on the screen if you checked Yes, you will print and mail your return to the CRA instead of using NETFILE.
  1. Answer all the initial interview questions if you haven’t already.
  2. From the left menu, select Income & Expenses, then Property Flipping.
  3. On the We need more info about the property you sold screen, select Yes for the two buttons (only one button if you indicated you sold your principal residence in Step #1). 
  4. For the question Did you sell or dispose of the property for any of these reasons, if none of the exceptions apply, check the box for None of these apply and then select Continue. 
  5. On the Sale of your Principal Residence screen, check the box if your flipped property was also your principal residence. Select Continue.
  6. If you didn't land on the Business expert interview screen, from the left menu select Income & Expenses, then Business profile. 
  7. On the Business expert interview screen, select Continue, then answer the series of questions about your income and expenses. On the screen for T2125 Cost of Goods Sold, provide your cost of the flipped property.
  8. On the T2125 Business Summary screen you’ll see the net income from your flipped property. You are done with property flipping unless you have a loss on your flipped property.
  9. If you have a loss from your flipped property, select the Forms icon from the upper icon menu, select the Forms button from the bottom of the screen and then select Form Lookup.
  10. In the Keyword search box, enter Business summary and select OK.
  11. On the Business Income Summary form screen, for your flipped property, for If the business transaction resulted in a loss, does this loss relate to a property flipping transaction? check the Yes box. 
  12. Select the EasyStep icon from the top icon menu. On the Business summary screen your loss is now reported as nil under the property flipping rules. Note: for a loss on a flipped property, your return must be paper-filed.

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