What to do with gains from rehab/flip

[Tyler Burlison]

Hi everyone,

From what I understand about short-term real estate gains, a way to avoid them is to buy another and do a 1031. Are there other ways to shelter the gains from tax? The amount will be between $30-40k in gains. Would it be possible to open a self-directed IRA for funding deals in the future and not have to pay taxes if I put it in an IRA, assuming I could put the entire amount in it? Just wondering if there are any other options besides having to buy another property.

[Ashish Acharya]

Quote from @Tyler Burlison:

Hi everyone,

From what I understand about short-term real estate gains, a way to avoid them is to buy another and do a 1031. Are there other ways to shelter the gains from tax? The amount will be between $30-40k in gains. Would it be possible to open a self-directed IRA for funding deals in the future and not have to pay taxes if I put it in an IRA, assuming I could put the entire amount in it? Just wondering if there are any other options besides having to buy another property.

Tyler, the profit from flips doesn't qualify for 1031s. Only capital gain qualifies for the 1031 exchange. 

There are many individual and business limitations to putting money into an IRA. No, you cannot put the entire amount.

The best way to save taxes would be selecting the right entity, finding the right kind of retirement account, using depreciation form rentals to offset your income, and such.