Need advice on 1031's and rehabs. - Posted by Chuck

Posted by JHyre in Ohio on July 02, 2003 at 18:29:43:

OK, buying and selling properties normally makes you a “Dealer” (see my article on the subject). That’s bad - you don’t get 1031, depreciation, capital gains rates or installment sale treatment. If you rent the properties out and hold them for 1+ years, you can at least argue that you are in the rental business…though if you regularly sell the properties, you are still likely to be a “dealer”, meaning all of the goodies go bye-bye. At that point, there is no magic bullet - just generate as many rational deductions as possible to offset the dealer income. By rational, I mean buying things that the business needs, or things that you’d have bought anyway (and are deductible). Otherwise, you are spending a dollar to save x cents. Incorporate CAN save money. DEPENDING on the exact circumstances - but incorporating (especially as a C-corp) is vastly oversold and NOT for everyone. This is the opposite of one-size fits all…personal details matter!

I short, I can give some general suggestions for your very general question, but the details will drive the real answer. Clear as mud, right?

John Hyre

Need advice on 1031’s and rehabs. - Posted by Chuck

Posted by Chuck on July 01, 2003 at 22:41:51:

I own 2 homes. One primary. I don’t want to do 1031’s, but I would like to buy and sell rehabs. How do I do it so that I don’t get killed on taxes, and can I rent the rehabs while working on them. I know others do it. Do you get a rehab license, incorporate ? Befuddled