Updated over 5 years ago on . Most recent reply
Live-in Flip vs NOT
Hi all-
Newbie here. Searching for my answer on BP, time and time again I hear that live-in flipping is too good to be ignored due to the enormous tax capital gains tax benefit. My question is, what differentiates the live-in flip that qualifies for this versus a property that does not qualify for this? In other words, what qualifications are present to qualify for this tax-exempt status? I'm trying to figure out where the line between live-in flip and house that needs minor repairs falls, because certainly not every house that needs a bit of work will qualify for tax-exempt status. Thanks for your help.
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- Qualified Intermediary for 1031 Exchanges
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@Michael Hahn, It's as simple as this - The live in flip you're thinking of is for your primary residence only. As @John Warren said, if you live in it for two out of the five years prior to sale you get to take the first $250K ($500K if married) of profit tax free. And you can do this once every two years. It is the golden goose. I've done it 6 times myself. There is no better gimme from the government than this. The catch??? It has to be your primary residence. And you have to be willing to move every few years.
1031 exchanges are only for investment property. And when you do a 1031 you defer paying the tax indefinitely. Why are they popular? Because it's the only way to sell investment real estate and buy new investment real estate and defer indefinitely paying tax on gain and depreciation recapture. This is an investors dream
Primary residence - tax free
Investment property - 1031
- Dave Foster
