We are small potatoes!

[Chris Stone]

Did I spell the veggie right?

I know they say to ask your CPA. We have a ordinary tax accountant. He's not sure. I am a Realtor agent making less than $25,000 yearly . We have some nice rentals bring in a net of $25000 a year. We did our first flip and made $15000.  Easy, peasy. A few weeks of work, at most. Now I hear we may be designated as "flippers" and ALL our rental income and sales might be designated as ordinary income. So now, I'm a little wary of doing another quick flip.

Any real life experience with this?  

[Brandon Hall]

@Chris Stone if your tax accountant is telling you that, time to get a new one!

Intent is evaluated on a property by property basis. So you can technically operate as a sole proprietor in all of your businesses and not have to worry about converting passive income into active business income if you are flipping, because only the *intended* flips will be subject to self employment tax and ordinary income. Of course as a best practice you should have different businesses separated via entities.

Additionally, it's possible your flip may be classified as an investment instead of a flip. This will save you from self employment tax exposure. You need to get together with a real estate savvy CPA yesterday. While they may be costly, they'll save you thousands.

Hope this helps!