Real Estate LLC - Dealer vs. Investor
This issue of real estate dealer vs. investor has been brought up many times, but none of the forum questions I can find seem to address my particular situation. I understand that nothing said here constitutes official legal advice, but I thought I would get an opinion from some of you on how I should handle my particular situation.
1. My primary source of income/employment has nothing to do with real estate.
2. I purchase raw land as a hobby/investment - typically city lots with no structures.
3. No rents or installment contract payments are received.
4. I may decide to sell 2 or 3 of them a year, generally profiting less than $1,000 on each, after holding each property for at least one year.
Two questions: In your opinion, would I be subject to self employment taxes on the profits from the sale of these properties (considered a real estate dealer), or long-term capital gains (investor)? And, would forming a single-member LLC to hold title to these properties (for liability reasons) make the IRS more likely to consider me a dealer?
Thanks for your help!!