How to avoid taxes with primary income from flipping properties?
Flipper/Rehabber · Glendale, AZ · Member since 2016 · 64 posts · 69 votes
How to avoid taxes with primary income from flipping properties?
Most Popular Reply
Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votesOriginally posted by @Clayton Coombs:
Thank you Carl, I completely agree.
I contribute about $18,000/ year towards my roth solo 401k and about the same about the same to my traditional sep IRA. I understand the traditional IRA gives me tax benefits now and the roth will give me benefits in the future. However I still have a lot of years left before I can start drawing from those accounts. I did recently make them self directed so I can use them with some real estate investments but ultimately those accounts are still a little low without getting a loan.
You can do few things:
1) Start to leverage more rentals so the you can offset rental loss againsts your income. You will have no limitations as you are a real estate professional. But a rentals that’s has more equity appreciation( In a nicer area), they will either break even Cashflow and will give you taxloss via depreciation.
2) depending on your situation, start hiring your family member to shift income to Lower bracket or with no tax. . That way kids can fund their own education and even retirement accounts starting now rather than you funding their school/college via after tax money.
3) you need to be contributing towards qualified profit sharing plans via your businesse. You can shelter more than 60k for you, and may be 60k for your spouse, if your entity is structured properly to make it happen.
4) hopefully you are running your flips via S -crop to save on self employment taxes.
You need to talk to a good Professional.
INVESTOR FRIENDLY CPA®5240 Reviews
88 Replies
- Flipper/Rehabber · Glendale, AZ · Member since 2016 · 64 posts · 69 votes7y
Originally posted by @Jay Hinrichs:
You could always buy a new airplane and take section 179 bonus depreciation I have done that over the years..
but I love to fly and you make no money with them its a temporary fix..
I like the idea and would like to get my pilots license some day but unfortunately this won't be the year. Great advice for the future though! When I purchase some of my out of state rentals I can use the plane to visit them.
- Flipper/Rehabber · Glendale, AZ · Member since 2016 · 64 posts · 69 votes7y
Originally posted by @Mark Nickoson:
@Clayton Coombs, My advice is to pepper your flips with an occasional buy and hold. I've been doing my own taxes for years. I've hated it. It has taken me way too long and I've missed a few deductions along the way. But, I think it was worth it for me learning the principles. You'll need to learn the principles too, because it is up to you to provide the receipts for your purchases and your activities. Here are a few things I'd recommend reading:
IRS Publication 527 Residential Rental Property
Pub 535 Business Expenses
Pub 551 Basis of Asset
Pub 583 Starting a Business and Keeping Records
Pub 587 Business Use of Home
Pub 945 Depreciation
If you are just flipping, you won't get to use some of these concepts, but the more units you own, the more depreciation becomes your friend. There are advantages and disadvantages of corporations. Your CPAs and lawyers can help you with those concepts.
Don't forget to get @Amanda Han's book here on BP. She's done a few podcasts too.
I like @Carl Fischer's strategy of using funds out of Self-directed IRAs, but I haven't used it yet.
Use 1031 Exchange when you can.
Hopefully someone can advise you better for purely flipping.
Mark
Thank you Mark, that is great advice! I have been buying rental properties to offset my taxes as well as a long term retirement plan, however I have 1 of them for about 18 months and the other 2 I have owned less than 4 months. The 3 rentals should help but I'm not sure how much... As the years go on I will have more the depreciate. I will certainly read those publications! I know some of the basics but I want to learn as much as I can to help in future years. Thanks for sharing your knowledge!
- Flipper/Rehabber · Glendale, AZ · Member since 2016 · 64 posts · 69 votes7y
Originally posted by @Eric Nurmi:
@Clayton CoombsIve pulled my money out of my 401k. I found I could do better with it than the market could. Also, as an entrepreneur, I didn’t like having my cash in something that restricted my control of it.
I agree to an extent... Most of my money is invested in real estate because that is what I know, I'm passionate about and in control of. However I'm also a believer in not having all my eggs in one basket which is why I still have some funds invested in the stock market/bonds both in the US and international. I am certainly not an expert in that field and as well all know the market has been up and down a lot lately. However I am looking for the long term gain considering I won't be touching that money for another 30 years.
- Specialist · IL · Member since 2018 · 47 posts · 42 votes7y
Id encourage you to read “The Power I’d Zero” by David McKnight and “Money Master the Game” by Tony Robins. They discuss the history of taxes, and what that means for us in the future.
Based on this and other studies on the subject I elect to make sure my funds in retirement accounts are growing tax free NOT tax differed.
- Flipper/Rehabber · Glendale, AZ · Member since 2016 · 64 posts · 69 votes7y
Originally posted by @Brandon Hicks:
@Clayton CoombsYou’ve gotten a lot of short term ideas that will help. It sounds like you’re quite successful at flipping houses so I would suggest that you continue to focus on that. I don’t agree that buying rental houses is the best idea though. You’d need a ton of them to offset your flipping taxes and that would create a whole new set of problems. It takes a lot of time and effort to buy that many properties and then there’s the management of it all. It may solve your problem partly because dealing with the portfolio would cause to divert attention away from flipping and you’ll see your income drop as a result. I’d recommend that you find some good multifamily syndicators to align with that are long term hold guys and invest in their deals as a limited partner. You’d get the tax breaks you’re after as a passive investor and at some point you’d not even need to flip to generate $250-300k in income. And that income would not be taxed as aggressively as your flipping income.
Thanks for the advice! My long term strategy is owning rental properties for passive income. I currently have 3 properties that I own free & clear and want to add 1-2 more in 2019. I'm certainly not wanting to go out and buy a bunch of properties right now just to offset my taxes however I do plan on adding to my rental portfolio each year. I've thought some about multi-family but I'm not sure I want to deal with that right now since I manage my own properties.
- Developer · Houston TX · Member since 2018 · 423 posts · 400 votes7y
Jay great point about GOZONE. Something I recently heard and am doing research on, is Trump's new Opportunity Zones suppose to give great tax benefits to both flipping and long term holds. In Houston we have a few great buying areas that are not really war zones that is included in this new tax savings plan. Heard many Hedge Fund Managers are raising capital to target these zones across the country. Does anyone have more info that they can share so both Clayton and the rest of us can use as potential investment strategy.
- Flipper/Rehabber · Glendale, AZ · Member since 2016 · 64 posts · 69 votes7y
Originally posted by @Luciano A.:
Hello. I am new to this site but have been investing in both flips and long term holds for the past 14 years. Own over 30 properties and own a couple of businesses. To buy a property in hopes of appreciation sounds like the same advise I heard from everyone while living in CA back 2006. Back then the so called next door investor whether it was the waitress at Dennys or my Mailman everyone was telling me how they bought a house in X city, with little or no money down and is loosing $500 per month while renting it out but that was not a problem because they felt it was a small price to pay given the upside in appreciation. All they had to do is sale in one year and they would make $50-$100k. I never considered that investing. Investing in my option is to make money the day you buy. Sure there is value play and other methods but in this market it is just too hot to think values will keep going up. One day and it can be 3 months or in a year but there will be alot of investors left standing when the music stops during musical chairs in this market.
Buy, Buy, Buy.. who cares if you dont make any cashflow because you are banking on appreciation. I have always treated Appreciation as a bonus and never bought a deal in hopes of appreciation. What Flippers need to know if you sale more than 5 in one year you will be considered a Dealer. IRS taxes the heck out of you thus many dont realize they loose alot of their "profits" to taxes. As a Flipper you have gotten yourself a job not a business. I like that you are cautious and dont want debt but real estate is a leverage play. If you talk to any SUPER successful old timer who has over $10 million net worth you will hear they used some leverage but did not bet the farm on any one deal. They did not over leverage. In real estate you make your money on the purchase. If you buy correct and are well capitalized you can push through the down markets. Some good points made here about using S corp to reduce SS and employment taxes. I would suggest getting a small mortgage on your investment properties no more than 60-70% thus giving you some cushion if the market goes south. Another strategy might be to do the BRRRR method as that will give you conservative loan to value but you dont sale you keep and make monthly cashflow from each deal while increasing your net worth. The bank looks at your Financial Statements to determine your risk. FS is like the adults report card when they come into adulthood. Having a high net worth helps to open doors. Having high income from flipping is not always a good thing for bankers. Also another option that I have been hearing but I personally dont use is using self directed IRA. The money has to go back into that account including profits but you might be able to pay yourself as a Project Manager thus giving yourself a good salary while growing your cash from one flip into another and thus building a great retirement account. You can always dip into it and pay the taxes/penalties as you take out so not like you cant access until you are at legal retirement age.
Sorry for the long response but just think people forgot what happens when markets turn and all this easy money goes away. It was not long ago that all the over leveraged, banking on appreciation investors walked away from their investments when that play was no longer feasible.
One last point, as many others said you have to do smart tax planning ahead of time to do it right and legit. Trying to do after the fact is tough. If you end up paying the taxes just remember you are a business and not employee so you can take all the deductions to run the flips.
Keep up the great job and keep finding yourself great deals that you can make money from.
L
Thank you, I agree 100%! I am certainly not the most experienced investor in the room but by selling real estate the last 7 years I got to witness and talk with a lot of people that lost everything in the recession. I will never buy a property in hopes off appreciation, as you mentioned I just see that as a bonus. The 3 rental properties I currently own I purchased at a large discount, they get good returns (for AZ) and I also get some tax benefits. It is clear you know what you are doing and have done well. I appreciate you taking the time to share your advice with me and others.
- Flipper/Rehabber · Glendale, AZ · Member since 2016 · 64 posts · 69 votes7y
Originally posted by @Harrison Sharp:
Originally posted by @Eamonn McElroy:
@Harrison Sharp "4. Conservation Easement. I’m really surprised this didn’t show up, this is a charitable contribution in which you typically get around a 4x multille deduction on your “investment”. This would probably be the best option for 2018 since the other items will take time to set up with a legal team and a CPA who knows what they’re talking about."
I assume you're talking about conservation easement syndications.... I wouldn't call them a valid tax avoidance strategy and their efficacy is debatable at best.
Yeah that's what i'm referring to. It depends on how aggressive you want to be on your return. The key is finding a syndication company that do them right. I have multiple clients getting an ROI of 40% to 80% on these easements and the most the IRS has disallowed was based on the valuation and they only lowered it 20%.
For this guys situation and depending on his comfort level, this would make the most sense for 2018 at least
This is my first time hearing about Conservation easement syndications. Not sure what it was I googled it and found this article: https://www.landtrustalliance.org/news/syndication...
That helped me understand it a little better but it is clear that there is some concerns to what is legal and what is not. I'll certainly do some homework on it to see if it could be a possible option. I do appreciate you bringing it to my attention.
- Flipper/Rehabber · Glendale, AZ · Member since 2016 · 64 posts · 69 votes7y
Originally posted by @James Kojo:
I'm surprised nobody else brought it up already: Bonus Depreciation.
@Jay Hinrichs mentioned it in the context of buying a airplanes, but there are actually many other ways to take advantage of it.
Firstly, for the houses you bought this year, you can take the full 5,7,15 year depreciation schedules *this year*. Depending on that cost basis of your rentals, that could be a very big paper-loss. Since you would easily qualify for as a "real estate professional" according to the IRS code, there is no limit to how much depreciation you can take.
This will require to pay for a cost-segration study. Previous to this year, this strategy was typically not recommended because the cost of the study often outweighs the benefits for SFRs. However, you can do a low-cost "residental" study. That coupled with the new bonus deprecation rules probably change the cost/benefit ratio in your favor. Check out kbkg for the residential study.
Secondly, you can buy a car. If you buy a regular passenger vehicle for business use, you can get 18K deprecation this year. If you buy a larger vehicle (6K+ lbs), you get the *whole enchilada* in depreciation. That's right: then entire cost of the vehicle. Of course it doesn't make sense to buy a car just for the deprecation (or an airplane for that matter), but if you were thinking about getting one in the next couple of years anyways, now's the time to act.
Thirdly, and it may be a little late in the game for this: you can invest in multi-family syndications. Cost-segs may or may not work for SFR, but they almost always work for larger MFRs. A knowledgeable syndication lead can commission a cost-segregation study, and pass the depreciation straight through to the passive investors.
Please keep in mind those are 2-3 sentence descriptions of very complicated and new tax rules, so don't go off half-cocked and try to implement them without getting some real advice from a tax pro. And speaking of which, if your CPA isn't already talking to you about bonus depreciation, then you need to find a new CPA asap. I had a CPA for 15 years whom I absolutely loved, but he wasn't a REI specialist, and he didn't know about stuff like this. You *need* a specialist for your field.Disclaimer: I'M NOT A CPA AND THIS IS NOT ADVICE! :)
Hope that helps!
James Kojo
Thank you James, I will certainly look into that!
- Flipper/Rehabber · Glendale, AZ · Member since 2016 · 64 posts · 69 votes7y
Originally posted by @Llewelyn A.:
I do want to congratulate Clayton on having a really great year!
First, I wanted to thank everyone here that offered advice that I did not @ Mentioned. Of course, however, that the reader of this thread really needs to understand this is a very complex topic and not all advice should be taken, but all should be researched thoroughly.
Second, I mentioned Luciano mainly because I do understand where he is coming from when he mentioned that the advice of buying for low cash flow AND high appreciation hurt him or others who have followed that strategy in the past.
Rest assured, there will be others that will be hurt by the low, no or negative cash flow AND high appreciation strategy in the future. BUT there will equally be those that will be hurt by buying high cash flow and NO appreciation as well. There is no monopoly of hurt by buying with the no cash flow high appreciation strategy. I personally know quite a bit of people who have been hurt by buying cash flowing properties where the cash flow suddenly disappeared when unemployment skyrocketed.
Now, many of us got into the Real Estate game one way of another and many of us will encounter Rich Dad, Poor Dad. While I don't really think of his advice as fantastic, he makes some really good points, including this one:
Note where the Self-Employed quadrant is. Note how he is dressed on each side.
The funny thing is that should you follow the advice from this diagram, and you actually make your way into the Investor quadrant, not only does your Money work hard for you (and you get to play a lot of golf), but you will AVOID paying a lot of taxes until you sell the Investment, and in the case of Real Estate, you can exchange until you die, or hand it down to your children at a stepped up basis.
Flipping to me is a job. Buying sound, good, quality Real Estate where you don't do much work because it's highly desirable, where the job market is very strong even in a down market, AND you hardly have to put any time into it because it runs like a well oiled machine, puts you in to the Investor's Quadrant, paying very little taxes until you die.
Over my 21 years of buy and hold Investing in Real Estate, while I was doing this before reading Rich Dad, I always understood that the way to avoid paying taxes is to be in the Investor's Quadrant. Unfortunately, many people either confused or ignored the concept of what an Investment really is.
The MORE you work, the more your Investment is a Business. The LESS your work, the MORE your investment IS AN Investment.
I mentioned Eammon and Matt here because they gave the advice of low cash flow, high appreciation as a tax avoidance strategy. In this case, that IS what I have practiced over 21 years. What they gave in theory is what I do in practice. AND IT WORKS.
The one gotcha is the dangers of a down market. This is why you have to be very smart and use the gift you have been given that separates you from the animals.
OR... even if you don't want to separate yourself from the animals, then think like a Squirrel!
Squirrels know that if they don't put away their nuts for the winter, by the time the winter comes, they may not make it through.
The Squirrel needs to think about the FUTURE because he isn't gathering his nuts to eat it NOW. It's this thought that allow him to weather the winter.
Us INVESTORs (by the way, I don't consider too many people Investors if they are owning Real Estate but are doing a LOT of work for it, those people have a job), in order to be good, need to think about the FUTURE, in my case, at least 10 years out, and always saying to myself, how many NUTS do I have to put away to weather the intensity of the WINTERs that I see in the FUTURE?
Since I'm from NYC and I buy in quality neighborhoods, over the several Economic WINTERs that I went through, the NUTS (Investments) that I have GATHERED have done so well, I slept like a Baby in my little squirrel hole, AND, I have successfully avoided paying a lot of Tax by utilizing the tax loopholes (think 1031 Exchanges, holding onto the Investments as you get taxed only if you sell, etc.).
I don't want to change the topic, but to me, Flipping is at BEST a business, and businesses pay Tax, which is unavoidable.
INVESTMENTs are you tax shelters.
You decide which quadrant you want to be in.
You are completely right! I have read rich dad poor dad and cashflow quadrant and agree with the model. However one does not become a business owner or investor overnight, typically people have to start at an employee or self employed. I started as an employee shoveling hot asphalt in the AZ summers. I then got my real estate license to learn about real estate with other peoples money. I have since transitioned into doing flips and my own investing. I am still self employed being a real estate agent and flipper however i'm working toward being a business owner and investor before I'm 35. I have now had a full time time job for 11 years (I'm 29) but my goal is to be able to retire by time I'm 40. That is why i'm passionate about learning how to properly invest and avoid taxes because even though I won't be able to utilize all these strategies this year I know I will be able to use them in the years to come. I appreciate your advice.
- Flipper/Rehabber · Winston Salem, NC · Member since 2018 · 33 posts · 24 votes7y@Carl Fischer Love that saying. Taxes are a privlage to those who work for a living. Welfare is a reward for those who don’t work.
A lot of investors will ask a random CPA what is the best strategy for me or is this xyz expense deductible. Most CPA's will say it depends. And this is so true (what is deductible for me may not be deductible for you - my business is structured differently, a deduction is phased out, I am a passive investor, etc). I believe you mentioned in your original post that you were researching CPA's. Find one that has experience in your key area's of expertise (real estate, flipping, etc.) Discuss your business, structure, where you want to go and plan. Having a plan and discussing with your CPA prior to initiating said plan is one of the best ways to minimize/defer/avoid tax.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Clayton Coombs:
Originally posted by @Llewelyn A.:
I do want to congratulate Clayton on having a really great year!
First, I wanted to thank everyone here that offered advice that I did not @ Mentioned. Of course, however, that the reader of this thread really needs to understand this is a very complex topic and not all advice should be taken, but all should be researched thoroughly.
Second, I mentioned Luciano mainly because I do understand where he is coming from when he mentioned that the advice of buying for low cash flow AND high appreciation hurt him or others who have followed that strategy in the past.
Rest assured, there will be others that will be hurt by the low, no or negative cash flow AND high appreciation strategy in the future. BUT there will equally be those that will be hurt by buying high cash flow and NO appreciation as well. There is no monopoly of hurt by buying with the no cash flow high appreciation strategy. I personally know quite a bit of people who have been hurt by buying cash flowing properties where the cash flow suddenly disappeared when unemployment skyrocketed.
Now, many of us got into the Real Estate game one way of another and many of us will encounter Rich Dad, Poor Dad. While I don't really think of his advice as fantastic, he makes some really good points, including this one:
Note where the Self-Employed quadrant is. Note how he is dressed on each side.
The funny thing is that should you follow the advice from this diagram, and you actually make your way into the Investor quadrant, not only does your Money work hard for you (and you get to play a lot of golf), but you will AVOID paying a lot of taxes until you sell the Investment, and in the case of Real Estate, you can exchange until you die, or hand it down to your children at a stepped up basis.
Flipping to me is a job. Buying sound, good, quality Real Estate where you don't do much work because it's highly desirable, where the job market is very strong even in a down market, AND you hardly have to put any time into it because it runs like a well oiled machine, puts you in to the Investor's Quadrant, paying very little taxes until you die.
Over my 21 years of buy and hold Investing in Real Estate, while I was doing this before reading Rich Dad, I always understood that the way to avoid paying taxes is to be in the Investor's Quadrant. Unfortunately, many people either confused or ignored the concept of what an Investment really is.
The MORE you work, the more your Investment is a Business. The LESS your work, the MORE your investment IS AN Investment.
I mentioned Eammon and Matt here because they gave the advice of low cash flow, high appreciation as a tax avoidance strategy. In this case, that IS what I have practiced over 21 years. What they gave in theory is what I do in practice. AND IT WORKS.
The one gotcha is the dangers of a down market. This is why you have to be very smart and use the gift you have been given that separates you from the animals.
OR... even if you don't want to separate yourself from the animals, then think like a Squirrel!
Squirrels know that if they don't put away their nuts for the winter, by the time the winter comes, they may not make it through.
The Squirrel needs to think about the FUTURE because he isn't gathering his nuts to eat it NOW. It's this thought that allow him to weather the winter.
Us INVESTORs (by the way, I don't consider too many people Investors if they are owning Real Estate but are doing a LOT of work for it, those people have a job), in order to be good, need to think about the FUTURE, in my case, at least 10 years out, and always saying to myself, how many NUTS do I have to put away to weather the intensity of the WINTERs that I see in the FUTURE?
Since I'm from NYC and I buy in quality neighborhoods, over the several Economic WINTERs that I went through, the NUTS (Investments) that I have GATHERED have done so well, I slept like a Baby in my little squirrel hole, AND, I have successfully avoided paying a lot of Tax by utilizing the tax loopholes (think 1031 Exchanges, holding onto the Investments as you get taxed only if you sell, etc.).
I don't want to change the topic, but to me, Flipping is at BEST a business, and businesses pay Tax, which is unavoidable.
INVESTMENTs are you tax shelters.
You decide which quadrant you want to be in.
You are completely right! I have read rich dad poor dad and cashflow quadrant and agree with the model. However one does not become a business owner or investor overnight, typically people have to start at an employee or self employed. I started as an employee shoveling hot asphalt in the AZ summers. I then got my real estate license to learn about real estate with other peoples money. I have since transitioned into doing flips and my own investing. I am still self employed being a real estate agent and flipper however i'm working toward being a business owner and investor before I'm 35. I have now had a full time time job for 11 years (I'm 29) but my goal is to be able to retire by time I'm 40. That is why i'm passionate about learning how to properly invest and avoid taxes because even though I won't be able to utilize all these strategies this year I know I will be able to use them in the years to come. I appreciate your advice.
you wont retire.. that's what everyone thinks and barely no one does in real estate you just keep evolving.. its a lifestyle not work and stop.
- Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes7y
You're screwed. Paying taxes is not optional. And, progressive taxes exist in the US (rather than flat), so the more you make, the higher percentage of that income goes to tax. LOL. My partner about craps his pants every year at tax time. Super nice guy who really gets unhinged when he realizes how much the government takes, and then promptly spends unwisely. Add the deficit spending (the amount our government charges to our future) and he really gets pissed off, with myself angry with him.
Why does the world not revolt? Well, it's brilliant really. The employed world is sheltered from this shock, as taxes are deducted before the earner ever has their hands on the money - they never see it - out of sight, out of mind. For the rest of us, we feel the money in and out of our hands, so we tend to be more aware, and subsequently annoyed, at the rate of taxes imposed in our country today.
LOL. So, want a lower tax burden? Stop voting for people who always take too much and spend more than you already gave them. That pretty much describes 99% of congress. Seriously. That's the answer. Not joking one bit. You pay all those taxes because you approved all those taxes, or at least said nothing when you didn't, and the old saying of speak now or forever hold your peace came into play!!!
Moral of the story? It would make good business sense to become an activist. Why do you suppose businesses lobby politicians? Regular Joes need to start lobbying too.
- Rental Property Investor · Caledonia, IL · Member since 2015 · 290 posts · 213 votes7y
Not sure if this advice is on here or not as I did not want to prune all the replies, but to me it is very very simple. Rent it for 1 year then sell it as it becomes capital gains / about 1/2 the highest tax rate from the feds not sure about your state taxes. A complete no brainer to me - I never ever flip props anymore as it is way way too expensive . As far as a new CPA or "you need professional advice" etc... sounds like to me you have plenty of good input from savvy investors.
Congrats on your success and best wishes moving forward.
- Kansas City, MO · Member since 2017 · 4 posts · 4 votes7y@Carl Fischer food stamps and welfare are hardly an "award" as it's never enough to actually live on. I also take issue with the idea that folks on welfare "don't work." That's a myth, as I've worked in social services for more than a decade. I see real estate as an excellent way to invest my money and someday retire, but I'm also troubled sometimes by the "more, more, more, and more for me" philosophy in REI. These boards offer great advice but sometimes what I see lacking is how real estate investors are forward thinking about how their investments impact communities in positive or negative ways. Taxes aren't bad. Not being able to shelter your every last dime isn't a bad thing either.
- Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes7y@Carl Fischer As someone whose family has relied on public assistance to get through tough times, I find your comments ignorant, petty, and entirely false.
- Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes7y@Jeana Van Sickle Thank you!!
- Realtor · Joplin MO · Member since 2018 · 1 post · 0 votes7y@Eric Nurmi I would love a copy of this email for my own taxes. Thank you in advance!!
- 7yPatti RobertsonBusiness MemberProperty Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
@Eric Nurmi - A self directed IRA can be investing in pretty much anything you want to invest in (with a few restrictions). I own rentals in mine. I know others who flip and wholesale in theirs.
- Prescott, AZ · Member since 2015 · 14 posts · 8 votes7y@Clayton Coombs , I’d recommend that you interview the Hall CPA firm, which specializes in REI. Their principal was featured on a BP podcast.
- Investor · Rochester, NY · Member since 2017 · 206 posts · 175 votes7y@Clayton Coombs There is no easy away around it. The tax man is always going to get his tax payment. But! You can decide when and in one case how much. Now please note; I am not a CPA and this is just an approach that I’ve done in the past. I believe you’re only taxed capital gains if a property is bought and sold for a profit inside of two years. So, one approach would be to flip a property into a rental for two years and then sell it. It helps you avoid capital gains. Btw - I could be wrong so consult a professional
- Rental Property Investor · Milwaukee, WI · Member since 2016 · 62 posts · 28 votes7y@Kate J. There is a limit on the tax deduction 😉 You can still contribute and backdoor that the same day.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.