CalculateRealEstateROI

Flipping · Guide

Flip Taxes Explained

Flip income is ordinary + SE tax — structure to reduce the bite.

Reviewed by Keiron Brown, Founder & Editor, CalculateRealEstateROI · Educational estimates only — not investment, financial, tax, or legal advice

Key takeaways

  • Flips are ordinary income.
  • SE tax 15.3% applies.
  • S-corp election cuts SE tax.
  • No capital gain treatment for dealer activity.
  • Quarterly estimated taxes required.

Core concepts

Dealer status

Flippers are dealers — inventory not investment.

S-corp benefit

Pay salary + distributions; cuts SE tax.

Quarterly estimates

Avoid underpayment penalty.

Step-by-step framework

  1. 1S-corp election with CPA.
  2. 2Reasonable salary set.
  3. 3Quarterly estimates.
  4. 4Real estate CPA engaged.

Common mistakes to avoid

  • Treating flip as long-term gain.
  • Missing quarterly estimates.
  • No retirement plan.

Frequently asked questions

Why dealer status?

Intent to resell — not investment.

S-corp savings?

$5–15k per $100k profit.

Retirement plan?

Solo 401k allows $69k contribution.

Quarterly amount?

25% of net profit each quarter.

Action checklist

  • ☐S-corp elected.
  • ☐Quarterly estimates.
  • ☐Retirement plan.
  • ☐CPA engaged.

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