Starting Louisiana LLC for slow flip

[Jessie Huffey]

Hi All,

My husband and I have done a couple of "slow flips" in our personal names in order to take advantage of the capital gains exemption. We are now considering buying property in Louisiana (with a promissory loan note from personal funds).  We will use this property as a primary residence while doing a slow flip. We already have a construction company llc but are leaning towards starting a single member real estate llc for holding our new property and any subsequent Louisiana properties. My understanding is that the tax treatment for single member llc's would still allow us to take the $250,000 capital gains exemption if we sold a couple of years down the road. ? We would then re-invest the profit into additional property. I really prefer the personal asset protection offered by the llc and don't really want to deal with the headache of umbrella insurance and all the exclusions to that policy, nor do I have any interest in fighting with an insurance company down the road if I ever need to use my coverage. I would also love to hear from anyone who has done something similar.

[Al Lev]

I believe you can arrange something that may work but advice from both CPA and attorney would be advisable.

If the property is owned by LLC whether single-member or multi-member, it will not be considered owned by you/your husband hence exclusion unlikely be available. The 1031 exchange will be available in this case.

However you could structure it so that the property is held in a land trust with with you/your husband and LLC being the beneficiary. The ownership interest can be freely transferred within the land trust without public knowledge. (Attorney can advice on the proper way of achieving this and some advanced planning is likely to be required).

As a beneficiary of the trust you will be considered an owner and exclusion can be applied for.

Hope this helps.

P.S. What is "slow flip"?