Hi all,I've been reading about the Passive Activity rules that prevent passive losses (eg Depreciation) from being offset against ordinary income.

You will have to pay ordinary income tax on distributions from Traditional IRA.

For any business deduction, it needs to have a business purpose and be "ordinary and necessary."

So, the profit is taxed as ordinary income, including self-employment tax.Hope that helps. 

I'm also curious how much it costs to prepare the land and install plumbing, electricity, and concrete (driveway, walkways, patios).I'd love all the insights I can get from anyone that has experience doing this.

Quote from @Sean McKee: Ordinary wear-and-tear on a 1bed apartment shouldn't be more than $200 per year, and that's being generous.I manage around 150 class-C rentals and over 80% of my renters get their full deposit back.

It's not just about the greenery; features like patios, outdoor lighting, and water features can significantly increase a property's appeal and, consequently, its rental value.In Orlando and its neighboring cities, several rental complexes have reaped the benefits of investing in their landscapes.

It's worth pointing out that OP originally mentioned investing in 401(k) which would mean interest, dividends and capital gains are deferred until the money is withdrawn (usually after 59.5) And then, any withdrawal is taxed at ordinary income.

Although no single factor is determinative, the combination of several factors supporting a particular result is sufficient for a court to decide whether a taxpayer held property for sale to customers in the ordinary course of a trade or business.

So the tax would be at ordinary income rate.