Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Austin Real Estate Forum
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 6 years ago on . Most recent reply

User Stats

4
Posts
6
Votes
Victor G Perez
6
Votes |
4
Posts

Seeking some advice, in Austin

Victor G Perez
Posted

Hi all.

First let me introduce myself.

My name is Victor, I have been living in the Austin area for 10 years now, originally from Spain.

I bought my first home in Austin in 2009, and sold it for a good profit in 2013, when I married, to buy another home with my wife.

Ever since, I have been wanting to invest some money in real state, mostly to avoid just having cash seating in the bank, and build some equity for the time when we retire.

At different times we have looked at different types of properties, but for one reason or another we would just stop looking for a while and then start over again.

Just a few months we started looking again, I wanted to find some investment property that provided some positive cash flow, but after talking with some friends, realtor, mortgage broker... it seemed that it could be better to find another property to move to, and rent our current home out, since we got it at a good price in 2013 and should get a good rent.

Now, while looking for that, I found a house I thought had good potential with some renovations, and long story short, we ended up in a contract to purchase it. My broker and my wife think it's much better to rehab and sell it than rehab and rent, in part because it has a pool.

So now we are in the process of buying a house, to remodel and hopefully sell fast enough, and that's when I started wondering about taxes, liability and what not. For the last week or so, since we entered the contract, I have been reading all I can in my free time, but that has resulted in more questions than answers.

At the moment we don't have any LLC, Corp or anything like that. Our professions are not related to real state or construction, and I never had to constitute any kind of company in the USA (did back in Spain, but laws have nothing similar).

After much reading, the only two things I'm starting to get clear are: that buying and selling within a year has very different tax implications than living in your home for a few years then selling it, and that I should find at least a good CPA and possibly a good lawyer specialized in real state to figure out how to structure this to minimize taxes and liabilities.

At the end of the day, my goal remains the same that I want to end up with a couple of investment properties, don't necessarily need to base my retirement on that, but just to not have all my eggs in the same basket. But doesn't seem like we are going to hold to this property.

Can someone give me a bit of advice what's the best way to structure the first flip? should we setup an LLC or any other kind of business, knowing that we will use contractors for the biggest items?

And can someone recommend good and inexpensive (or should I say not too expensive) CPA and lawyer, knowing that I don't want to spend a lot of effort and money on setting up a structure for what could be the only operation of this type we ever do?

Sorry for the long post and thanks all for your answers.

Most Popular Reply

User Stats

361
Posts
394
Votes
Kris Wong
  • Rental Property Investor
  • Austin, TX
394
Votes |
361
Posts
Kris Wong
  • Rental Property Investor
  • Austin, TX
Replied

You are correct that flipping a house is very different than living in a house (and selling), from a tax perspective. The former is active business income, and the latter is not business income, and is also sheltered by the section 121 exclusion, assuming you meet the requirements. You do not need a legal entity to have a business, from a tax perspective, only revenue. A legal entity gives you legal protection. I would definitely advise you to speak with a CPA. There are a number of changes in the recent tax bill that impact business income. I have worked with Doug Tidwell and Chase Insogna, locally, and I think either would be qualified to help you.

Loading replies...