Everyone who purchases real estate considers it an investment and typically considers its potential resale value before acquiring it. However, IRS has different views of what qualifies as an investment property. Property held as stock in trade or primarily for sale is excluded from tax deferral treatment under section 1031. This would include properties acquired with the intention of “flipping” them. Additionally, these types of property are not considered capital assets and their sale are taxed as ordinary income not capital gains.