TaxWatch: Here’s the one thing you need to do to flip houses without paying taxes on the profits

Everyone would like to claim they are engaged in an activity that results in a profit that is non-taxable. Here is one activity that has the potential of generating tax-free income – but if not handled correctly, what you thought would be tax-free money can be subject to hefty taxes.

The activity? Buy a home with the intent of flipping but that you treat as your principal residence. Then renovate and sell it, and begin the whole process all over. If you satisfy all the tax requirements, you can continuously exclude up to $500,000 of each gain if married filing jointly ($250,000 for other taxpayers).

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