As this would be a flipping project and the properties would be held for such a short period of time, this would fall under ordinary income (unfortunately), and there wouldn't be the benefit of paying the lower capital gains tax rate.

That means that any gain on sale would be taxable at ordinary income rates.To avoid that, the property would have to be converted to rental property prior to the exchange.You might want to reach out to one of 1031 experts on these forums for more information.

@Jim Macedon The contract should have all this laid out and will be the "go to" if something out of the ordinary happens.

You are going to pay tax at your ordinary income rate (depending on your income and if you are filing single or MFJ).

I own a business flipping vacant land properties so according to the irs I am a real estate dealer and my income is taxed as ordinary income which includes the full 15% self employment tax. 

For those who use lines of credit, is that only for acts-of-god types of repairs or vacancies, or for ordinary capex, like a new roof?  

If this were an ordinary mortgage, she could just make the payments and keep the property. 

Assuming you operate your rentals as an individual or through a pass-through entity (sole proprietorship, LLC, partnership, S Corp), rental income is taxed at your ordinary rates (based on your tax bracket).

If we distribute the money to make the investment we are taxed at ordinary tax rates.If you have money in a traditional IRA or even a Roth IRA you can Roll it over into a self directed IRA.

I suspect that a judge would hold you to a higher standard than an ordinary seller.