I feel like I've asked this question a million times and the answer is no. But I want to minimize my tax burden on a house I am in the process of flipping. I am only planning to hold the house for 3 months and I am going to reinvest the profits into a multi family or another flip. Ideally id do a 1031 exchange but does anyone know on the requirements for holding and renting it etc?
Any other tax saving strategies that have worked for you? I am in the Massachusetts area.
Income from flipping is ordinary income and the place is not eligible for a 1031 exchange. you will have to pay both income tax and self employment tax (both halves of medicare and social security taxes) on the profits.
The length of time doesn't matter. It is your intent that counts. You would have to ensure that you truly had the intent to hold for rental (not rehab/flipping) in order to qualify for 1031 Exchange treatment. The length of time that you rent it out can go a long way to help support your intent to hold for rental, but it is not the only factor.
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