RE Dealer?

[Ron K.]

I know the IRS is vague about this, but generally at what point does an investor become a real estate dealer. I am looking to get more into rehab and flips. I am currently a self employed home inspector, plus I own a duplex and a 4-plex as rentals and have one home that I rehabbed and sold on a note. I would like to do 3 or 4 such rehabs/flips a year and also add to my rental portfolio, while continuing with my home inspector business. From this strategy, would it appear that I would still be seen as an investor and not dealer?

[Account Closed]

If you are doing 3-4 rehab/flips a year it is quite likely you will be considered a dealer. There is no real bright line here though.

I would caution you as well to clearly separate your rental activity from your rehab/flip activity otherwise this could get lumped in as dealer activity as well, not good.

Usually it is better to have two separate businesses for these activities.

Is this the first year you had this much turnover?