Minimizing Taxes When Building and Selling Homes – Advice Wanted

[Jeremy Santy]

Hey BP community,

We’re wrapping up a new home build in Kauai and are considering selling it and starting another project. Buying land, building and selling (not part of a formal construction business), and we’re trying to understand the smartest way to minimize our tax liability from the sale.

Has anyone here gone through this and found good strategies—like structuring it as a primary residence, using a specific entity setup, rolling gains into the next project, or anything else that’s worked?

We’re not looking to flip casually but are open to building more long-term if it makes sense financially. Any advice, examples, or pitfalls to watch out for would be appreciated.

Thanks in advance!

[Ryan Mancuso]

@Jeremy Santy Great Question.

I am in a similar predicament. I am not a CPA, but I am a licensed agent and I buy land, build a duplex and then sell them in AZ. Though not all projects are home runs, they have been an incredible learning experience for my partner (the builder) and I.

I have spoken with a 1031 exchange mediator and she confirmed what others in this thread have said. The intent is the most important part of the exchange. Usually timelines are around 3 years to hold it.

Have you thought of doing a refi once you're done, renting it and then re-using that money for another project? That money is (to my understanding) non-taxable and then you can rent it, depreciate it and then sell it later when the capital gains hit is lower (long term rather than short term)

What I have chosen to do is build and sell through my LLC for these projects. I save on commissions because I am an agent, but I pay the taxes upfront, but that way, my cash is liquid and my overall tax hit is a lot lower than if I had a w2 job.

Everyone has a different reason they do things, but hopefully you can pick up some ideas! And I would love to learn if there are other ideas I have not considered.

@Jeremy Santy Great Question.

I am in a similar predicament. I am not a CPA, but I am a licensed agent and I buy land, build a duplex and then sell them in AZ. Though not all projects are home runs, they have been an incredible learning experience for my partner (the builder) and I.

I have spoken with a 1031 exchange mediator and she confirmed what others in this thread have said. The intent is the most important part of the exchange. Usually timelines are around 3 years to hold it.

Have you thought of doing a refi once you're done, renting it and then re-using that money for another project? That money is (to my understanding) non-taxable and then you can rent it, depreciate it and then sell it later when the capital gains hit is lower (long term rather than short term)

What I have chosen to do is build and sell through my LLC for these projects. I save on commissions becauase I am an agent, but I pay the taxes upfront, but that way, my cash is liquid and my overall tax hit is a lot lower than if I had a w2 job.

Everyone has a different reason they do things, but hopefully you can pick up some ideas! And I would love to learn if there are other ideas I have not considered.