Tax & Capital Gains

[Jorge Diaz]

First time in the home flipping business. If I purchase a fixer upper and flip it do I have to pay capital gains for the profit or can I just reinvest it on another property and not have to pay capital gains if I am constantly buying and flipping. Someone told me that I would only pay capital gains on the last property I buy if I don't buy another property within the period I would have to get the next one. Any help is appreciated. Thank you in advance. 

[Ying Tang]

It sounds that you are talking about 1031 exchange. Based on what I have learned, 1031 exchange will not apply here. 
The property need to be an investment, while for fix and flips the property is considered an inventory not investment, which you have no intention of holding for an extended period.

Secondly, it might also not be able to meet the timeline requirement of 1031 exchange, where you need to identify the property of interest in writing in 45 days and get it within 180 days after you sell previous one.