Ordinary income may be subject to UBIT tax which could be as much as 39%.

Flips are taxes are ordinary income in the same year, but rental is not taxed because you are not selling rental each year for profit. and eventually, when you sell, it will have capital gain treatment.

This might be little confusing, but you might have tax loss, but still have actual cash flow from your rental because of depreciation(known as a phantom expense where there is no cash outflow).There are various stuff that you can deduct.Rather than giving you the entire list, let me say that you can deduct expenses that meet these two criterions: Ordinary Course of BusinessNecessary in the course of businessHere is the list some of the items:1) Mileage: any mileage that is associated with the rental activity.

The property is definitely not sold.Now if the landlord obtains a tenant, say signs a ordinary 10 year lease, it is clear he made no sale of the property and no capital gains tax is due.

However, if you had a true Intention of development, the ordinary loss will prevail. 

It looks like the letter is a month old.An ordinary case of termites won't typically bring out a building inspector. 

Your skills and character traits are not ordinary.

@Jen WellsThe Interest on the HELOC would be deductible interest expense on your tax return.For an expense to be deductible - it needs to be ordinary and necessary.

Further gain will be taxed as ordinary income. 

If we were to do a high end flip or something out of the ordinary we would be inclined to higher a designer/arch.