Hi everyone, I bought a garden flat and I’m the only one with direct access to the garden and only my patio opens to the garden.

I believe that it would be ordinary income, not capital gain, which makes it even worse.

With some advanced planning, management fees (expenses on the rental property) and management income (income on the management company) can effectively manage the character of income (passive vs ordinary) and minimize your tax bill. 

In general, your ordinary maintenance costs should be around 10% of the rental income.As Matthew mentioned, your PM Agreement should have a limit to how much the PM can spend without your permission.

I should clarify that $175k would be subject to 25%capital gains tax and ordinary state income taxes.

The hoa just redid the outsides of the units within 2 years, and the inside of this unit needs no work.Tenant currently in place, on a one year lease set to expire April 2015, paying $900 per month LL is currently paying for electric and Internet, approximately $65 and $33 per month respectively (per current owner)$367 for HOA (hoa includes exterior/grounds/pool/patios/cable/water/trash as well as flood and hurricane insurance I'm told by current owner that taxes are $606 annually, as investment property The owner says she is also paying $15 monthly for Renters insurance.So in short:45,000 asking price  Income -900 total monthly rental income Expenses -65 electric33 internet50.5 taxes367 hoa 15 renters insurance 530.5 total monthly expenses (not including mgt fee, vacancies, maintenance, etc) 10800 annual income6366 annual expense Conclusion/questions/my thoughts:1) As seen above, this deal fits neither the 50% rule, nor the 2% rule.

It is YOUR SECURITY that the tenant will fulfill the terms of the lease and return the property in its original condition, minus ordinary wear-and-tear.

For instance you can set up a fund that invests in real estate via syndications that offer tax benefits to investors where REIT produce purely ordinary income.

This is out of the ordinary- I am building duplexes out of shipping containers.

It took about 5 months for the flip so I will have to file it as ordinary income.