Reinvest Gains VS 1031 Exchange

[Tim Lynch]

From a tax perspective are there big differences between a 1031 exchange and reinvesting gains within the same tax year?

I buy and sell property with an LLC and just closed on a flip with a $60k profit. The sale price was only $325,000 so if I was to complete a 1031 exchange I would have to buy a property worth more than that, and the down payment would be more than the profits earned. So not only are all profits tied up into the new property, but so are a lot the previous out of pocket expenses.

I understand the benefit of a 1031 is to defer the capital gains to a later sale but what if I was to reinvest all the gains into another property? If my LLC takes the $60k profited on this flip and purchased a property with it the LLC wouldn't show a gain for the year. Thus, would any capital gains be owed on the flip? It's my understanding that capital gains are realized on an LLC on an annual basis rather than on a per project basis. Is that correct?

Thanks for any insight!!