Question for the pros about capital Gains.

[James G.]

I have a question on how to handle capital gains on a recent flip. I currently fix and flip my primary residences. In the past I have held the property for over 2 years before I sell but this current property I have only owned for a bit over 1 year.
A quick breakdown of the numbers are as follows. Purchased for 1.16M, put aprox 250K into the property and will list at 1.7M. The house should go rather quick, I have been following the comparables quite close and a near identical home across the street has sold at my listing price very quickly without nearly the quality of the renovation. I know these numbers might be tough for many to comprehend but the area I buy in, is , and has always been in great demand. I should say I have done this 3 times before.
In addition I have an accepted offer on my next property which needs a great deal of work for 885K with an ARV in the 1.55 ?1.6M range. With a pre-engineer estimated repair cost in the 300K range.
My question is, If I clear 350K on my current home what is the best way to handle the capital gain implications? I am torn between putting down the 25% deposit on the new home and keeping the profit of the sale in the bank towards the renovation cost of the new property. Option 2 would be to put the 25% deposit plus the profit of the sale down on the new home to reduce the mortgage and then take a line out for the renovation? Or is there some kind of renovation loan available that might work better in this situation? I will mention that I will not be living in the next house until after the renovation is complete.
In an effort to not post a long winded post I might have been a bit vague on details. I am in no way a pro at this but have kind of stumbled on flipping my primary residence with a good return so far. I have yet to speak with my accountant as this next house has just recenty become a potential deal. Any opinions/suggestions would be greatly appreciated.

[Steven Hamilton II]

James G.,

That is one of the smartest ways to invest.

The gain would be 100% capital gains tax on your profit (purchase price minus rehab)

Would you be looking to get a HELOC on the property? If so that may be relatively difficult. I would finance as much of that property up to $1m as that is the highest principal balance able to be deducted without limitation for purposes of your tax return. Then I would utilize my cash as much as possible as another deal may come up.

-Steven