Question:
“I’d like to start buying fixer-upper homes and reselling them for profit by exchanging them, so I can avoid taxes…”
Answer:
I know you’re not asking a question, but I have two important comments for you…
#1: There is HEAVY competition for “fix/flip” properties like you want to buy. Last week a man came into my office and said he had “too much money and not enough properties to buy.” He has about $10 million. There are probably 100s of people and investment groups doing or TRYING to do what you want to do.
#2: In order to avoid taxes, you must do a 1031 exchange. However, to qualify for a 1031 exchange, your property must be held as an investment or used in a trade or business. “Held for investment” refers to intent to hold for appreciation. “Used in a trade or business” means income-producing, like rental property. (See your tax professional for more info.)
Sorry to rain on your flipping parade. Oops…that came out wrong!
