Continue Flipping or switch to Brrrr?

[Felisha McCurry]

Since the market has been so hot, we have been taking advantage and fixing and flipping the last few years. It's been great. However, the tax implications/capital gains for flips is crazy! I'm thinking we should re-think our strategy and go ahead switch to brrrr this coming year. We wanted to build our capital for the market downturn then buy up rentals, but should we keep flipping and wait or go ahead and start brrrring?

[Joseph Lopez]

Hey that's great!  So you can take additional deductions as a licensed agent also.  Great.  Well to answer your question about the tax laws I wanna borrow Nicholas's answer a few months back.  I am not sure how to "forward" the message so I simply cut and paste.  I did want to acknowledge Nicholas and give credit where credit is due.

Nicholas Aiola CPA & Investor from New York, New York

replied 9 months ago @Jeff Spacek There are a lot of changes in the new tax law; it's the biggest overhaul of the Tax Code in over 30 years.

It's impossible to generalize an effect of a tax change to "everyone" but C Corporations are certainly winners here, thanks to the tax rate slash to 21%. Pass-through entities (sole props, LLCs, partnerships, S Corps) will get a nice 20% deduction (depending on a variety of factors) as a result of the new law.

Property taxes (along with state & local taxes) are capped at $10k for homeowners (personal residence) claiming this deduction on Schedule A (Itemized Deductions). For investors, property taxes are still deductible in full against rental income.

Hope this helps!

Nicholas Aiola, CPA in New York (#119518)

• Nicholas Aiola, CPA
• https://www.nicholasaiola.com