Hi, I am fairly new to BP and am considering investing in the US. I am quite familiar with financing options and rules in Canada, but the US is a totally different ball game. I'm still in the process of just starting ...

My limited tax understanding would lead me to believe that this would be taxed as ordinary income, not capital gains.

take the depreciation, because it lowers your ORDINARY income, which is at higher rates (up to 35%) versus CAPITAL gain which is up to 20%.

That's taxable at ordinary income rates, maybe with SET.Fix and flips make no sense if there's no work to do.

I don't think that your Passive income (Real Estate) would allow the offset of your Ordinary Income / Short Term Cap Gains.

Real property depreciation unrecapture is actually not taxed at your ordinary income rate (depreciation recapture is).

If you become successful flipper you’ll pay ~50% taxes on your ordinary income.

Whereas, if they give you a number that is more in line with reality and what a passive investor should expect for such little risk, then you might be inclined to tell yourself you can do better.In neither case were you able to dig in and find out how they operate and what makes them special or what makes them ordinary.  

In my book, if you're paying ordinary income tax on your real estate profits you might as well be working a job.

Any profit on the sale of your spec homes is ordinary business income subject to self-employment income taxes as well.