Posted by Nate on March 18, 2001 at 12:52:16:
It is taxed as ordinary income. If you buy for the purpose of holding, and sell within 12 months, it’s a short term capital gain, which is taxed as ordinary income. If you buy for the purpose of rehab/resale, it’s ordinary income no matter how long you hold. You are also considered a dealer and cannot use a 1031 exchange since the house is inventory, not investment property.
If you have a habit of buying houses to hold, and selling them within one year, you will eventually be classified as a dealer by the IRS anyway.