Is it an Investment or Business for tax purpose?

Question

I bought an investment house, closed on 12/31/2019, after fixing it up, sold it in mid June 2020. On 12/1/2020, I bought another house, and it's leased out since.

On my 2020 tax return, should I report the 1st house as an Investment income rather than a Business income?

Bill Hampton · Answer

@Felix K.

I recommend that you don't try to DIY your taxes. Real estate taxation is very complicated. You don't know what you don't know.

I recommend finding an accountant that specializes in real estate taxation. You may want to consider working with your accountant remotely to expand your options.

I would also recommend looking for a tax strategist who is willing to work with you throughout the year, not just when preparing your tax return. You want an accountant that can help you strategize and who is responsive when you want to know the tax consequences of the decisions you are making throughout the year.

Good luck and let me know if I can be of assistance.

Is it an Investment or Business for tax purpose?

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