S Corp: Refinancing a Planned Flip into a Hold - TAX

[Michael Camden]

Hi All, We're currently flipping a property within an LLC taxed as an S Corp. The LLC holds title to the property. As an alternative strategy post rehab, we may keep the property as a Hold. If we do so, we'll be refinancing the property after appropriate seasoning. We'll be looking at obtaining a personal residential mortgage from a portfolio lender and placing the property in an LLC as a Partnership. From what I've been able to obtain, this appears to be a possible path. I've read quite a bit of opinions on the forum that believe flips should be in an S Corp as it's beneficial once you're doing high volume from a SE Tax liability position while LLC's taxed as partnerships or SMLLC are ideal for holds considering the passiveness of the income. Can those that have experience with this situation or those CPA's on the board that deal with Real Estate provide their view on how to avoid recognizing a gain on the property transfer when we refinance? As a disclosure, I do carry a CPA license but do not practice in real estate tax and would appreciate all feedback on similar situations. Best, Michael