I sat down with my accountant today and discussed hope to maintain my investor status while I transition to a full time investor. He assured me that fix and flips would never jeopardize that status. However I have read many time contradictory things.
Does anyone know of a case where an investor was forced to become a dealer and what are the details.
I don't understand the question @Robert LaBrie. But I think that's more ignorance on my part than what you said. Hopefully someone more knowledgeable about the topic will chime in.
I'm just glad someone responded lol. I hear guys say that if you are a full time flipper you will be treated as a dealer for tax purposes. The IRS also says such things. That being said my accountant assures me the irs never would do that to me.
Being a dealer is a horrible situation as far as I am concerned. Rather than paying 0% on long term gains, as long as income is less than 90 some k, you pay normal income tax. This included payroll tax too.
You loose all benefits of being an investor and to me that's what what makes real estate so great.
I believe this only applies if you buy and sell in your own name. An LLC or corporation can't be classified as a dealer.
Of course, laws vary from state to state, seek your own local legal advice.
I am way late to this conversation, but am wondering if you were able to find any answers to your question? I have the same question. Thanks!
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