Capital Gains Tax

[Sean Sheridan]

Hello I just got my first flip under contract and did very well on it. I’m trying to find if there is a way to lessen the amount of capital gains I pay. I never made the property my primary and only had the house for 8 months. A 1031 exchange is great idea but is not something I want to do with this property. Any advice would be greatly appreciated. Thanks 

[Michael Plaks]

Quote from @Sean Sheridan:

Hello I just got my first flip under contract and did very well on it. I’m trying to find if there is a way to lessen the amount of capital gains I pay. I never made the property my primary and only had the house for 8 months. A 1031 exchange is great idea but is not something I want to do with this property. Any advice would be greatly appreciated. Thanks 

Flips do not have capital gains and are not eligible for 1031. Those are for rental properties, not for flips.

What you normally have on flips is ordinary income plus 15% self-employment tax. You cannot do much to mitigate it if this is all you do. You can redirect some of your profits into a retirement account, but then you cannot spend this money or reinvest it into your next deal.