All Forum Posts by: Cass Lowrie

@Jacob Sampson & @Taylor L. - Guys....thank you for your feedback.  I was starting to come to grips with the fact that $25K would not work for flipping and you kind of confirmed that.  :)

Thanks once again.  I love the BP community!

@Brian Eastman, Hey Brian, thanks for your feedback and advice.  I was starting to think there was not a way to use the $25K for flipping unless we hired another contractor to do all the work.  Seems like no-go to use for fix & flip.

However, the Solo 401K would be a great vehicle for us to each put $56K per year into.  That would effectively shelter $112K of our profits from flipping.  Then we could use the 401Ks to buy/hold rentals for long term growth.  Is that correct?  

Thanks once again for your advice Brian!

I fix & flip homes. In 2019 that business will profit about $250K. I have an LLC for buying properties and another LLC that holds a contractor's license. (Company A buys the property and Company B renovates it.)

My wife has a 401K from a former job.  It only has $25K in it but I want to get that off the sidelines and invested into our fix & flip business to try and shelter some income taxes.  

I first thought a SDIRA was the correct choice, but the more I read about them, the more restrictive they seem.  (Seems like I would break tax law without ever meaning to!)

Now I'm reading about Solo 401K's and they are starting to sound like a much better tool.

Asking for any advice from the seasoned PRO's here in BiggerPockets.  There is a tremendous amount of experience and wisdom here and I'm hoping to learn from that.  Seeking advice and very thankful for any that comes my way.

What's your opinion/experience with the investment vehicles?  Which is better for fix & flips?

Thank you in advance!!

@Mike B. and @Scott McIntosh, thanks for the advice on Qualified Opportunity Funds.  I will do some research on them.  First time hearing about them so I really appreciate the advice!

Might be in touch with you Scott.  :)

Thanks once again.

@Carl Fischer, thank you for the advice.  I was feeling like rentals and depreciation may be the key to offset some taxes.

@Mac F., yes we do.  My wife has a W2 income of about $120K.  I will just draw some income from these flips for 2019 but won't need much.  We have pretty low expenses that my wife's income covers.  The goal was to build our nest egg with flips.

In the Carolina's, I have found a beautiful micro-niche market for fix & flips that will generate $200K+ per flip.  That's the great news!  Bad News.....now I'm facing some pretty steep tax payments as these are considered regular income.

I'm wondering what seasoned pros are doing to shelter profits made from fix & flips?  We are only holding these properties for 5- months while renovating and selling them.  

We love to get to the flip profits as quickly as possible....but I'm wondering if we would be smarter to rent the homes for 6 months after we renovate so we can "own" the property for 1 year and face Capital Gains instead of regular revenue taxes?

My wife is not a part of the business but has a self directed IRA. Can I use her IRA to loan my investing/contracting company "Hard Money" and then shelter the profits in her SDIRA as a loan payback?

I love BP and truly appreciate all of the advice and wisdom that is shared here.  Thank you in advance for any advice you have!

@Eamonn McElroy & @Michael Plaks, Thank you for the feedback and advice.  I should have mentioned that the SDIRA id actually my wife's.  I have an S-Corp that buys the properties and another S-Corp that acts as the general contractor.  I was hoping to avoid being the "dis-qualified" qualified person using this structure.

If my wife's SDIRA invests in a company that I own/manage, does that remove the disqualification?  I have spoken with my CPA but it seems a little "gray" at best.

I certainly don't want to break any tax law....just trying to set up a structure that could help shelter some gains.  

Perhaps quick fix & flips will always be taxed as income?  If so....I guess I need to pick up some rentals to offset with depreciation?  Maybe a blend of flips & rentals is required?  

Again....I sincerely and truly appreciate advice from seasoned vets.  I'm only 1 year into real estate investing and have a lot to learn to say the least!

In 2019, I'll fix & flip 3 properties with a total of $250K+ of profit. I just set up a Self Directed IRA but it only has $24K in it.

Can I invest just $24K from the IRA and then dump all $250K of profits back into the IRA as sheltered profits? I can't seem to locate a rule on the amount of profit the IRA can receive compared to the investment.

Any other ideas of good ways to shelter the profit from fix & flips?  I'm only holding each property for 4-6 months so no 1031 option.  

Thanks to all for ANY advice!