New to this in Seattle

[Joe West]

I have about 25 yrs in the trades. I'm a licensed electrician and new GC and am looking to get into flips and eventually ground up construction. If you have off market opportunities in King County, I'd love to chat

[Philip Barr]

Hi! Welcome to the forums. I appreciate you introducing yourself. I don't have any opportunities to discuss with you, and you have a lot of experience in the trades that will serve you well, which I cannot comment on.

However, I do want to mention some common recommendations for flipping in legal structuring. Typically, it is best to do your flips in a structure with corporate taxation so you do not get hit with dealer status by the IRS. If you get labeled as dealer because you have done several flips, and thus the IRS looks at you selling properties as if they were inventory off of a shelf, you can lose valuable tax benefits like being able to participate in installment sales, 1031 exchanges, loss of capital gains rate on any property sales (all future sales treated as ordinary income, along with many other negative tax implications. It is better to set up an entity taxed as a C Corporation (whether traditional corporation or LLC) as the base for your flips so you don't get hit with dealer status. But the structuring typically doesn't end there since over a period of time you can build up quite a history in one business entity with all of these properties, and that increases the potential for liability from one or several of these properties to take down your base entity and ruin your other flips. Instead, it is better to have a subsidiary LLC owned by the C Corporation, and that subsidiary LLC would own the flip property. One LLC per flip, and once the sale funds are received and then distributed to the C Corporation owner, you would close the flip LLC and then move forward with a new flip LLC for each property. That is a great way to limit liabilities and also get some tax advantages available to the C Corporation.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.