All Forum Posts by: Kenny Mercado

 Yes. Thank you for the clarification 

@Kenny Mercado

The "2yr rule" I think you are thinking about is the sec121 exclusion where if the property was the primary residence for 2 out of the last 5 years you can exclude $250k if single or $500k if married filing jointly of capital gains from the sale from your income tax.  So, I think you have mixed up "apples and oranges.."

@Kenny Mercado

First, I agree with @Jacqueline Gardiner, but I haven't done it myself.  Although for example, if you "flip" a property, the profit/gains are taxed as ordinary, earned income (including self-employment tax) since you are considered dealing as opposed to investing.  Lets face it, you are basically a developer/builder --- that's not investing.  Another INFORMAL test is you haven't been able to depreciate anything...

Curious about your though process:  "...moment I bought the land and decided to build on it, it would be considered “investment property” if I didn’t hold it for 2 years."  What did you think would happen after 2 years?

Hi Kenny, I think either scenario would work. BUT, I think you need to hold the house that you're currently building as an investment property first. Do a search for similar subjects, but as I recall, you probably need to hold it as an investment property for at least two years before undertaking a 1031 exchange.