1031 Exchange / Taxes

[Kelly Ellis]

Bigger Pockets family,

I bought a piece of lakefront property for $30,000 a little over a year ago. We planned to build on it. Got engineered prints, cleared the land then decided that we didn’t want to move their because we wanted to keep our home that has more land. We just sold it for $70,000. I’m the realtor so we get to keep all of the selling amount besides the 1% Broker fee I pay. I also have a contractors license and a Construction company. We want to start flipping houses. How can I use this money towards our flipping endeavors without getting hit with a lot of taxes?

Could we do a 1031 with this property money if we did a rental instead of a flip?

I would rather flip but I know we need to watch out for Uncle Sam. 

Any help would be much appreciated! 

[Carl Fischer]

@Kelly Ellis

Do the rental with the 1031 if it is worth it. Flipping is a business. 

At most you have $40k profit -long term capital gains at approx 20% tax is $8k - most likely worst case tax. 

There are some great 1031 peeps in BP community that may have something else -so wait for them to chime in.