USA Speculative Home Building

TDI

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Question on long term tax strategies for spec home building:
I build mostly single family custom homes, but I just started my first new construction single-family home for sale (spec home).

I plan to use the proceeds of the spec home to buy another lot(s) to continue building more. So let's say I make $100,000 in margin on the sale of the first one, I will then turn around and use that to buy another lot for $100,000. This brings my taxable income to zero, correct?

Then after the second sale I will buy two lots for $100,000 each, and continue this model.

The tax rules I've researched for builders, who plan to sell the property are to be treated as income and not long term capital gains. Which is preferred if i can continue this model.

Am I missing something? As long as I continue to buy more real estate with the margin I make each year, I will have no taxable income.

Eventually I would plan to start holding the properties as rentals, and then could move to the long term capital gains tax if i ever wanted to sell.

Thanks!
 

BIG E

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Why don't you get yourself an accountant who knows the construction business who can guide you on these issues?
 

TDI

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Obviously that is my plan, just wanted to get thoughts on a very simplified topic quickly. Thanks for your amazing insight.
 

BIG E

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"Very simplified topic" - tell that to your accountant
 

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