That's what it's there for.Couple things wrong in this thread:-  First, taxes on a flip are almost never capital gains -- profits are ordinary income taxed at your marginal tax rate, and may incur self employment tax as well.-  Next, you can't 1031 a flip property.  1031 is for investment property, which means that either the property was previously held as an investment (i.e., a rental) or the original intent was the hold the property as an investment, but some situation arose that led you to have to abandon that plan. 

@Sinavy Sao, If your actual net over the last few years is $1600 and you then refinance I think you're going to be closer to 0 than $1600.   

Hello,I'm looking for some advice on the best way to buy a family members home, and both of us paying as little tax as possible.

@Marie-therese Tai, Yep I wouldn't worry about that tax.  A

If you don't put it into service, then any repairs that you make will be capitalized instead of being expensed which creates depreciation recapture tax as opposed to expenses that reduce taxable income.Cheers!

Pro: in some state you won’t trigger a reassessment on your property taxes (in some however you will have to disclose the change of ownership)You may also not have any stamp tax as there will be no new deed recordingYou won’t have to pay for a new LLC.The LLC will be more seasoned and may look better for a lender.If you put a trust as member or another anonymous LLC, it will give you great anonymity on the ownership.Con: you inherit all the past liability of the LLC.You inherit also the initial depreciation of the property from the initial buying cost and also the recapture...For all these reasons, I rarely buy an LLC but prefer to deed the property into a new LLC instead.

Side note: on your "Post-Tax Gain" are you including income tax as well as realtors fees/closing costs?

@Puri Indah can sell a SFR and buy a duplex living in half without paying any tax.  As

If you sell, you will likely end up "recapturing" a good portion of the additional depreciation taken through the cost seg, so the you really just pushed off the associated tax a few years.3) What is your marginal tax rate?

As a non resident alien investing in USA I’m subject to very heavily withholding tax, as will you be. 39,5% on taxable income to be exact.