This can reduce your taxable income and, therefore, your tax liability.Section 179 Deduction: This deduction allows you to expense the cost of certain types of business equipment and property, potentially reducing your taxable income.

In light of that, I would like to reduce my overall taxable income and thus overall tax rate, which is one of many reasons I'd like to put the money toward real estate. 

Don't do that unless you can do it at least a year ahead of the sale.However, after the exchange is complete a contribution into or distribution our of an entity to the members is not generally a taxable event. 

@Ryan Davis what @Chase Gochnauer is saying is that every municipality calculates taxes different and uses different formulas to asses a property's taxable value.

Every dollar out the IRS will consider a dollar of gain and it will be taxable until you have taken out the full amount of your gain.In your example if you had 150K in profit then you would pay tax on the 100K and still shelter the other 50K of profit.  

When you file your taxes you apply your sec 121 exclusion to the 500K in boot that would normally have been taxable.  

Taxable Value 75,830Purchase 50,867Tax 1986.70Vacancy 10%Repairs 5%Capital Expenditures 5%Property Management Fee 10 %Investment results: Purchase Price: $50,867.00 Purchase Closing Costs: $3,000.00 Estimated Repairs: $0.00 Total Project Cost: $53,867.00 After Repair Value: $70,000.00 Down Payment: $10,173.40 Loan Amount: $40,694.00 Loan Points: $0.00 Loan Fees: Amortized Over: 30 years Loan Interest Rate: 5.000% Monthly P&I: $218.45 Total Cash Needed By Borrower: $13,173.00 Monthly Income: $700.00 Monthly Expenses: $643.95 Monthly Cashflow: $56.05 Pro Forma Cap Rate: 4.71% NOI: $3,294.00 Total Cash Needed: $13,173.00 Cash on Cash ROI: 5.11% Purchase Cap Rate: 6.48% Really, I know it’s not a great deal, but it’s a property that I can buy into for cheap.

However, you can take taxable distributions from the IRA if you need the funds. 2.

@Matt Lockwood: (I am not a CPA) Without getting into the technical jargon, one of the easiest ways to described difference between W-2 and 1099 is:1099: Gross Income - Expenses (Business related) = Net Taxable Income (Income on which you pay taxes)W-2: Gross Income (also the Taxable Income) - Taxes = Net Income and then you have ExpensesWork with a qualified and knowledgeable professional who can guide you through what is acceptable deductible expenses in REI.

You can still take you profit and purchase another property, but the sale of the flip property is a taxable event.