GUIDE
Unsold Flips at Year End: Inventory Accounting and What Your Books Must Show
An unsold flip at year end is a property you have spent money on and not yet sold, so its costs sit on your balance sheet rather than in your profit.
This page covers the records side of a flip that is still unsold at year end. Whether a flip counts as inventory for tax purposes is a question for your CPA, and the page says so where it comes up. The examples use Demo Flips LLC, the company in our sample report, and every number is invented data.
Year-end records are one part of keeping the books on your flips. The rest is in the house flipping bookkeeping guide.
What happens to a flip you have not sold by December 31?
Its costs stay on your balance sheet. Purchase, rehab and the costs capitalized into it sit against the property until it sells. Nothing about that property reaches your profit for the year.
A flip bought this year and still unsold on December 31 has costs and no sale. The books keep those costs against the property, one project at a time, until the sale closes. When it sells, the sale and every cost on that property come together in one result. How those costs are treated on your return is for your CPA to decide.
Why can a good year look like a bad one?
Because buying is spending and selling is the revenue. Buy 3 flips in the fall and sell none by December and the year shows spending with nothing against it, even though the deals are fine.
On Sep 30, 2026, the last month-end in the sample report, Demo Flips LLC held 3 projects with no sale yet.
| Project | Bought | Spent so far | Sales |
|---|---|---|---|
| Project 8, 1500 Sample Pl, Folsom | Jun 10, 2026 | $511,828 | $0 |
| Project 9, 3030 Example Rd, Lodi | Apr 2, 2026 | $442,814 | $0 |
| Project 10, 620 Demo Cir, Galt | Sep 18, 2026 | $276,478 | $0 |
| 3 unsold projects | $1,231,120 | $0 |
Picture these 3 as a whole year of deals, still unsold on December 31. The year would show $1,231,120 spent and $0 of sales. The money is not lost. It sits in 3 properties, $1,003,040 of it is owed to the lender, and Project 9 is already listed at $495,000.
What records does an unsold flip need at year end?
Per property: total spent to date, broken down by purchase cost, rehab, loan costs and holding costs; the loan balance; and the status. That record is what makes the year-end position explainable to anyone who asks.
This is the open-project record for the same 3 projects, from page 2 of the sample report.
| Project | Purchase cost | Rehab | Loan costs | Holding | Spent so far | Loan owed | Status |
|---|---|---|---|---|---|---|---|
| Project 8, 1500 Sample Pl, Folsom | $442,700 | $42,240 | $9,770 | $17,118 | $511,828 | $416,240 | In rehab. $42,240 of $95,000 budget used. |
| Project 9, 3030 Example Rd, Lodi | $352,160 | $61,500 | $7,540 | $21,614 | $442,814 | $359,000 | Listed at $495,000. Rehab done, 181 days owned. |
| Project 10, 620 Demo Cir, Galt | $269,668 | $0 | $5,986 | $824 | $276,478 | $227,800 | Closed Sep 18, 2026. Rehab starts next. |
| Totals | $1,064,528 | $103,740 | $23,296 | $39,556 | $1,231,120 | $1,003,040 |
Spent so far is the purchase cost plus rehab, loan costs and holding costs, to Sep 30, 2026. The purchase cost is the price plus the closing costs paid when buying. Loan costs are the points plus the lender's title insurance and deed of trust recording. Holding costs are loan interest, property tax, insurance and utilities.
Every line traces to a document: the closing statement, the rehab invoices, and the loan, bank and card statements. On December 31 the same record is brought up to that date.
This record is one item your tax preparer needs at year end. Everything else to send is on the year-end bookkeeping checklist.
Is a flip inventory? The dealer-against-investor question
It is whether property you buy to resell is treated as inventory held for sale or as an investment. It changes the tax outcome. It is a tax position, decided by your CPA or tax preparer, not your bookkeeper.
This page names the question and leaves the answer to the person who prepares your return. The records you keep are the same whichever way it is decided.
The IRS publishes its own wording on property held for sale to customers in IRS Publication 544, Sales and Other Dispositions of Assets. Read it there, with your CPA.
Read on irs.gov on Oct 23, 2026. This page is checked when the publication changes.
Who decides it, and what do your books supply either way?
The same records either way: what was spent on each property, when, on what, and what is still owed. A clean per-property cost record supports whichever position your preparer takes.
| Your CPA or tax preparer decides | Your books supply |
|---|---|
| Whether a flip is held for sale or held for investment | The date each property was bought, and its sale date or its status at December 31 |
| How the costs on each property are treated on the return | Every cost on each property, dated, by purchase, rehab and holding, with the document behind it |
| How a flip still unsold at December 31 is reported | The open-project record: spent so far, loan owed and status for each property |
Flipper Bookkeeping keeps the books and the records. We do not decide tax positions and we do not file returns. We set out the hand-off between the two jobs in bookkeeper vs accountant vs tax preparer.
These records come from monthly books, closed and reconciled every month.
Your company's performance, one deal at a time.
For your flips, Flipper Bookkeeping keeps the books and sends you, every month, a profit and loss for each deal, budget against actual during the rehab, holding costs month by month and cash against profit. See bookkeeping for house flippers.