Is flipping real estate considered ordinary income in Bangalore?

Real estate investing is a popular way to earn money, but it's not without its risks. The IRS taxes real estate investors at the same rates as other types of income. However, there are some important considerations to keep in mind when determining how to tax your investment income.

The two main types of real estate investments are rental properties and flips — buying properties and quickly reselling them for a profit. Flips are considered "ordinary income" while rental property income is considered "passive income."

Here's what you need to know about flipping real estate and how it's taxed:

Flipping Real Estate: Is It Ordinary Income?

Ordinary income is taxed at the highest tax rate of 37 percent, while capital gains are taxed at 20 percent if you're in the 25 percent or lower tax bracket or 15 percent if you're in the 10 percent or lower bracket. If you have carried interest (money from managing other people's money), that is also considered ordinary income and subject to those same rates.

If you sell a property within two years of acquiring it, it's considered a short-term capital gain and taxed at ordinary rates — regardless of whether it was purchased as an investment or for personal use, according to the IRS website.

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