Just sold flip, help me avoid tax

[Aaron Leger]

It’s a simple question. I just sold (closing in 2 weeks, all clear) a flip (single family). Can I take the proceeds and buy a multi unit and not pay tax or do I only avoid tax by buying another single. 

[Michael Plaks]

Quote from @Ashish Acharya:

Quote from @Aaron Leger:

It’s a simple question. I just sold (closing in 2 weeks, all clear) a flip (single family). Can I take the proceeds and buy a multi unit and not pay tax or do I only avoid tax by buying another single. 

Depending on what profit you are going to make, get the LLC and sell via that. You have time for this.

Then talk to your CPA, if you would benefit from the S-Corp election. If you don't benefit, the SMLLC doesn't impact your taxes. 

When you talk to your CPA about this strategy, have them explain why it technically violates the IRS rules on late S-corp election.   ;)

In general, as my colleagues have mentioned, what you're thinking about is a "1031 exchange" strategy that does NOT apply to flips. And it has its own strict procedures if you ever decide to exchange rentals or investment properties in the future. No, flips are not "investment properties."

Also, Step 1 is to figure out how much tax impact you actually have from this sale. It may not be as big as you imagine.