It depends. If you flip one house every one or two years, you might be able to take advantage of something called a tax-free exchange. This tax break is limited to investors, though. If you flip too often, you might not be considered an investor. When it comes to aggressive tax accounting, you are much better off taking the advice of a paid professional than trying to do it yourself using self-help books.
Let us suppose, however, you do qualify for the tax-free exchange. Here is how it works. First, it is not really tax free. You do pay the taxes eventually, usually on the built-up profits after you sell your last property and do not buy another one. In a nutshell, the IRS says you do not have to pay income taxes in the current year on your profits if you sell one property, buy another one of equal or greater value, and invest all your cash from the first sale in the purchase of the second property. The new property is called the replacement property. You must identify the replacement property within 45 days of selling your old property. You must complete the purchase of the replacement property within 180 days or by the due date of your income tax return for the year of the sale, whichever comes first. There are also other requirements; to learn more, look for articles or websites that discuss 1031 exchanges (pronounced ten-thirty-one), Starker exchanges, or tax-deferred exchanges.