Individuals who are not professional real estate developers may get capital gain treatment for sale of their real property if they engage only in limited development activities.

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According to the IRS, individuals who are not professional real estate developers may be eligible for capital gain treatment for sale of their real property if they engage only in limited development activities, such as subdividing a single property into smaller lots or improving the property by adding utilities or roadways. However, if the individual is engaged in a continuous business of buying and selling real estate, they may not be eligible for capital gain treatment and may instead be subject to ordinary income tax rates.

Individuals Who Are Not Professional Real Estate Developers May Get