Flip Tax Strategies

[Jaden Ghylin]

I’ve got problem that I could use the communities advice on. I've completed one flip this year and about to do another and really want to get the tax situation under control since I'm in a high bracket already.

Have you found any way to reduce or defer taxes from a flip?

Here are the strategies I’ve looked into:

1) 1031: IRS will not allow this if hold-time is under 12 months, with intent of resale
2) SDIRA: Again, IRS will not allow if hold-time is under 12 months
3) Rent for 1 year or rent to own for 1 year then sell: 15% capital gains rate
4) Offset short-term gain with depreciation from rentals (although, there is no way I can get enough depreciation to fully offset flip gains)

The only way I can really see to minimize taxes is to hold for 12 months and try to offset with rental depreciation. Any other ideas?

-Jaden

[Account Closed]

Flipping is a business. You might consider setting up a 401K or defined benefit plan. Depending on your situation this may mean up to 49K deferral on a defined benefit plan or 16,500/22000(assuming catchup provision) on a 401K plan.

I would hire a good CPA or other knowledgeable tax professional to review your situation. You may well have a number of unclaimed deductions that can be written off.