Financing as Develpoer + Builder

[Jen Etten]

Hello Everyone, 

My husband and I own a contracting co. We are in the process of planning our first spec home build. We have purchased the lot already and have the septic and site plan approved.  

My question is about financing and how to receive  the "profits" from the project. 

My lender wants us to include all labor costs into the estimates for this job so that the appraiser will have more information about the scope of work to be done. I wasn't planning on charging labor to "ourselves via the loan at 4%" throughout the project. I was planning on just making draws for the material and other sub contractors (plumbing, elect, etc) and then taking the profits upon the sale of the house once complete. 

Is this a good idea? Will is save me taxes in the long run? 

Based on my analysis if I charged labor I would be paying 4% interest + income taxes+ self employment taxes. If I waited to sell the property, I would only have capital gains (which would be taxed as regular income) but not self employment taxes-- right??

We are an LLC taxes as an S Corp.

Thank you so much.  I have gain so much knowledge by reading all your discussions.