I'm trying to save on taxes but wondering if this method is correct. Can someone help?
I have rehabbed and sold House A in April 2020 and House B in May 2020. I have purchased 2 more houses (House C and House D). Have completed rehab on C but it is still on the market and has not sold yet. I'm still working on completing rehab for D. House C and D will be sold in 2021. So all rehab costs of all 4 houses were paid in 2020 but only A and B were sold in 2020.
When I do my taxes, since I am set up as an LLC and all 4 properties were purchased under my LLC, do I have to match up my expenses with each house? OR can I report a loss because I have only sold 2 houses but have purchased and rehabbed 4 in 2020. In essence, can I spread out my expenses for all 4 houses thus reducing my reported profits to show a break even or a loss even though I made a profit for A and B? Instead of paying the hefty 25% (or so) taxes on a profit of $20k for house A, I would now show only a profit of $5k for House A and pay the taxes on $5k instead of $20K because I have spread out my expenses from C and D to include A and B.
I hope this makes sense. Any advice would be helpful. I don't want to do anything illegal but I will use any legal loophole that is available.
