Looking to reduce tax burden for 401k withdrawal for investing

[Amy Gullotta]

I am seeking tax advice on what my best option is for the investment property I purchased. In January of 2017 I took out my entire 401k in order to start real estate investing. I was no longer with the company, and no longer contributing, therefore it wasn't growing much at all. They were very conservative investments I knew NOTHING about. Was around $65,000. In March I purchased an investment property in my area for $20,000 cash and put about $25,000 into it. I'm a realtor, and newly a full time one (so my first time being self employed). The diy rehab took waaaay longer than it should have, but that said, I've now had it nearly a year, and its vacant. I purchased with the intention to hold it and rent it out. It is in a rental area. This same house if listed right now would go for about $65k (netting $20k profit). But now I'm torn on whether or not to flip it or hold it. I can get $800 per month from it easily. Here a few obstacles I have:

1) My first year paying out taxes on my ordinary income, let alone for the 401k withdrawal. (I did not get any witheld for federal taxes, but Michigan took 4% to handle the state portion).

2) Since I was the realtor that bought it, I chose to put it in my fiance's name. However all the cash into it is mine.

3) We also set up a mult member LLC (no incoming income yet)

So I'm torn on what to do with it. I already know i am going to take a big tax hit because of my 401k this year, and I don't want another one on him next year because of capital gains should we decide to flip it. The extra cash I have in profit would definately offset my tax burden this year, but I'm afraid I won't have enough to do another investment right away. So right now I'm leaning toward renting it for a year, since it's pretty much complete now. During that time doing a cash out refi on the property to try to recoupe as much as I can back in cash to keep going to the next.

Not only am I torn on whether or not to flip or rent, I'm torn on wheter or not to leave it in his name, quit claim deed it to me either jointly or singly, or put it in the LLC. Any advice would be great!