When I hear "active business", I assume this means that I need to pay SE taxes on earnings, can't depreciate, gains/losses are ordinary income, etc.

Steven, I can use the income from free and clear properties to qualify for another loan but big chunk of capital is stuck in free and clear properties and it increases my rental income which is taxed at ordinary income.

Another investor in the area with the same 2 units is renting out for $1250 each but they have been remodeled.Main things that need get remolded are 1. patio deck needs new roof and floor boards. 

In Norway we have [url]www.Finn.no[url], that have it all; real estate agents, car sellers, and ordinary classifieds and other.

I read that the units would be taxed as ordinary income ?

It's been a little while since we've built anything new given the state of the local market, but semi custom can be done here at about $90 per foot under air.That number included block construction, custom cabinets, tile and wood flooring, granite in kitchens and baths, nice appliances, paver patio / driveways, double crown molding, etc etc.At your $125-140 numbers you could really add some high end features.

There are rules in place about the plan providing a direct benefit to yourself thru the plans investments, but in most cases the investments would be passive (my plan invests in real estate notes and real estate limited partnership interests). 7- Under current law, the plan withdrawls are taxable as ordinary income.

However, net capital gains on debt-financed property, capital gains on cutting timber, and ordinary gains on sections 1245, 1250, 1252, 1254, and 1255 property are taxed.

Another neighbor had cut four large holes in the base of my block wall to hose the dog doo from his patio to my yard!

Why anyone would want to create an active income business to manage their own properties just to have active income that becomes subject to payroll taxes in addition to the ordinary income tax is beyond me.