Entity for a new flipper
I just broke the RE investors code. I jumped into flipping a property without having all the details hashed out ahead of time. I came across a good deal and had to move, so now I've got a property that's almost through rehab owned in my name and I need to figure out how to sell it without incurring massive taxes. I've seen some posts claiming taxes as high as 50% if SE and state tax is included. I'm in Minnesota, so state tax is a major factor also.
I've got a few questions. What happens if I just sell it as a sole proprietor as it sits right now and turn around and buy a rental property with the proceeds? Will I still pay short term cap gains on it (I'm almost certain the answer is yes. The rental will just give me some deductions to take against it)?
Can I transfer it into an LLC, then sell it? Does this help me roll the cap gains into the next property?
I'm also looking into self-directed IRA for flips, but I don't think I'm ready to jump into that on this one.
How are you shielding your short-term cap gain income from taxes? Please offer your insights.
-Jaden