Definition
Live-in flips involve purchasing a fixer-upper, renovating while living there, then selling for profit. Owner-occupancy status may avoid capital gains taxes.
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Live-in flips combine the benefits of owner-occupied mortgages with profit generation from renovations. Owners can claim primary residence status and potentially avoid capital gains taxes on profits under Section 121 exclusion ($250,000-$500,000). This strategy requires tolerance for living in construction and typically involves holding 1-3 years per property.
Pro Tip
Consult tax professional about Section 121 exclusion requirements.
Example
A couple buys a $180,000 fixer-upper, lives in it while renovating over 2 years, then sells for $280,000 without capital gains tax