Long term capital gains (after a year in service) can be significantly different than short  term capital gains(ordinary income rate).

Once your rental business in a given geographical area is up and running, you may immediately deduct expenses that are "ordinary" and "necessary" (these are specifically-defined terms) to expanding your rental business, but any costs attributable to a particular property that are incurred before the property is placed in service must be added to the cost basis of the property."

I know you can use an amortization schedule to break out a payment into principal and interest portions, and, I believe, the interest received would be considered income taxed at your ordinary tax rate.

Additionally, I much prefer to either entirely defer taxes or be taxed as capital gains, rather than ordinary income as flippers are taxed.That said, I look for mid-teens returns, low risk, and low-to-moderate time requirement in my own portfolio.Here's an example: I have a friend who is a hard money lender, and she brings in passive investors to provide most of the capital.

It's all considered ordinary income, subjectto the tax rate the individual is in, plus self-employment tax.

As stated, stick to the ordinary before turning to the extraordinary.Bill that makes me thing somewhere out there is likely a funny chicken and a mortgage joke for some reason.

Remember you make your money when you buy so using out of the ordinary practices to find your flips will pay off.

Until recently, if the value of a borrowers house declined and their bank/lender forgave a portion of their mortgage (via a short sale or deed in lieu), the tax code treated that amount forgiven as ordinary taxable income.

XXIX.MAINTENANCE: Notwithstanding the provisions between Effective Date and Closing Date, all personal property on the premises and real property, including lawn, shrubbery and pool, if any, shall be maintained by Seller in the condition they existed as of Effective Date, ordinary wear and tear excepted, and Buyer or Buyer's designee will be permitted access for inspection prior to closing in order to confirm compliance with this standard.

Would most ordinary home buyers know what that means?