However, the property’s cost basis (what they originally paid) carries over to you, meaning if you later sell, you may owe significant capital gains tax on appreciation.Alternatively, selling the property at fair market value eliminates gift tax concerns, but your in-laws may owe capital gains tax on any profit.

We are being conscious of property tax on a vacant piece of land (our potential liability) as well as the potential capital gains taxes (their potential liability). 

The total capital gains tax of $172,500 at 15% would be roughly $25,875.  

Hi Sandra, as soon as you can estimate the amount of gain you will recognize from the flip you should pay an estimated tax on that amount.

This is only a guess, take it with a gain of salt. 

That’s fine but how big is the gain?

I'll work with an attorney to assist with drafting that.Q2: Yes, I'll talk to my CPA but we'll most likely hold the property for at least 1 year under the LLC given our timeline to design, permit, build and sell the property, meaning I should avoid short-term capital gains.  

I haven't lived in it long enough to be exempt from capital gains, good point on that.

I'd be interested in any insight on the Sacramento market, esp. from investors in multifamily.

Join local Facebook groups in surrounding markets, and you will get more insight into other investors' experiences.