Property flippers are typically not able to 1031 exchange their property. However, property flippers may want to consider changing their tact and engaging in a 1031 exchange rather than a flip. In this article, we are going to talk about why property flippers should consider a 1031 exchange.
Flipped Property Does Not Qualify for 1031 Exchange
In a 1031 exchange, you want to move all of your equity from the sale of your relinquished property into other real estate that’s held for investment or business purposes. We often hear from people who want to flip a property. Unfortunately, flipped property generally does not qualify for 1031 exchange treatment because they are inventory.
The Tax Benefits of a 1031 Exchange
A qualified intermediary can be part of the solution by working with your accountant, attorney, and anyone else on your team to make the business plan such that you can move from being in a high effective tax bracket (like a flipper), to a low effective tax bracket (like someone who holds investment real estate).
When you 1031 exchange your property (and you do it correctly), you can defer 100% of your capital gains taxes on the sale of that property. That’s a huge incentive for property owners who can defer their taxes and exchange up into bigger and better property. It has the added benefit of being good for the economy as a whole.
Twin Cities 1031 Exchange Company
CPEC1031, LLC has been facilitating like-kind exchanges of real estate in the Twin Cities area for over twenty years. Our qualified intermediaries are on hand to help ensure you defer your capital gains taxes on the sale of investment real estate. We can answer all of your questions and guide you through the 1031 exchange process. Reach out to us today at our Minneapolis office to learn more about our service catalog and see how we can help you with your next 1031 exchange!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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