At a 7% annual return, this could grow to $908K after 10 years, providing immediate liquidity and diversification.Alternatively, holding the property could yield $825K net equity after taxes in 10 years, assuming a $900K sale, with the potential to defer taxes via a 1031 exchange if reinvested into another property.

I’m in the 33% tax bracket through my real job and this could be a big difference in taxes owed if we sold the property?

This is a screenshot from a private Facebook group for tax professionals.

Home went to tax sale county kept excess proceeds.

I don't know the answers on taxes, but New Jersey is the densest state in America.

It is tax free in the sense that you will not owe taxes today on the cash-out.

This isn’t/wasn’t a loophole - just tax policy. 

And must be pretty significant unreported income if it would have caused $45k in state tax liability.You advised your client to wait past the expiration of state statute.

@Tyler Speelman, A 1031 exchange solves the tax issue. 

Be mindful of short-term capital gains tax, as profits from flips held for less than a year are taxed as ordinary income, and frequent flipping may result in self-employment taxes.While profits from flips do not qualify for 1031 exchanges (since flips are considered inventory, not investment properties), you can minimize your tax burden by deducting allowable expenses like renovation costs, loan interest, and holding expenses.If you're considering diversifying into rentals, explore opportunities to benefit from long-term tax advantages such as depreciation and lower long-term capital gains rates.