Fixing A House & Captial Gains?

I would like to buy it, fix it, then sell handyman specials, but my attorney/cpa says the IRS will see this activity as self-employment definitely if I do the work, and possibly if I sub the work out.

How do I turn these properties into capital assets so to pay the capital gains rate instead of the earned income and the full payroll taxes?

Can I hold the fixer-upper properties in my personal holdings; therefore, making them '2nd homes' or can I somehow hold them in my LLC and still claim them as capital assets (gains)?

Thanks.

Comments(1)

  • DaveT7th July, 2003

    To qualify for the favorable long term capital gains tax rate (currently at 15%), you must hold the property for at least one year for the production of income or for appreciation.

    Buy, rehab, and place in service as a rental for at least one year should achieve your goal.

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