Advise on how to sell my flip house

Doylestown, PA · Member since 2017 · 4 posts · 2 votes

Hello, I recently purchased my first property. It was in bad shape and needed some love and I’m a carpenter by trade so I did all of the renovations. It’s coming together great but I’m trying to figure out the best way to sell it without getting hit hard by capital gains. I’ll be done the home just 6 months after I purchased it and I’m not trying to stay there for 2 years. This is my first home so I’m not sure if that will help. I was also told to make it my primary residence which I can do. Any advise is appreciated. Thanks

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Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes
2y
@Sean Sheridan I believe if you hold it 1year or less you will owe short term capital gains on it. If you own it more than 1 year and 1 day you owe long term capital gains on it which I think saves you close to 10% in taxes. It is when you own it and have it as your primary residence for 2 of the last 5 years you can take a gain of $250K individually or $500K if married tax free.
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Saaj Patel
Real Estate Agent · 901 Market st Suite 3065 Philadelphia, PA 19107 · Member since 2021 · 71 posts · 37 votes
2y
Sean,
You can always try a rollover method (1031 exchange) and defer those taxes to the next one.
PM me if you need some additional info!
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Sean Sheridan
OP
Doylestown, PA · Member since 2017 · 4 posts · 2 votes
2y
Thank you guys I appreciate the advise! I’m not sure the 1031 exchange will work for me right now so I’m leaving towards the 1 year 10% capital gains hit. Thanks
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
@Sean Sheridan
Tak yo your cpa as if you are considered a dealer the 1 year does not matter vs an investment which typically requires it to be rented.
I am not a cpa but last thing you want to do is hold it for longer period of time and still pay short term capital gains.
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
2y
@Sean Sheridan, if you've got a two year window then move in. In two years the first $250K of profit ($500k) if married will be tax free. There's no better way to eliminate tax than this. If you're concerned about tying up the equity so you can't do your next project then do a cash out refi and use that money tax free to get your next project going while you live in that house.
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