Buy A Rental Property From Hud

Comments(6)

• 
  DaveT1st March, 2004

  You already are an investor. If this is your first real estate investment, you became an investor the day you took title to the property.
  
  Now, go out and do it again, and again, and again.

• 
  pinghu1st March, 2004

  So if I sell this property,say one year later,
  the profit will tread as Capital Gain, not normal business income right Dave?
  I just want to make sure that buying the
  rental property from hud is't business activity.
  Thank you for the help

• 
  DaveT1st March, 2004

  OK, now this is a completely different question.
  
  How you USE the property during your holding period determines whether you hold investment property or business property or personal property or dealer realty.Investment property is held for the production of income (rental use, for example), or long term for future appreciation.Business property is used to house your business (office building or manufacturing plant, for example).Personal property is your primary residence or your second home. This property is held primarily for your personal use.Dealer realty is property held primarily for resale to customers (flip property, in all its forms).The use determines the character of the property, and the tax treatment applied. Buying a HUD property might make you an investor, but the property is not investment property unless you convert it to a rental or hold it for long term appreciation.
  
  How do you plan to use the property you purchased?

• 
  pinghu1st March, 2004

  Right now I use this property as rental
  after one or two years I may sell it, or doing rent to own... Does this propery usage plan make my propery as a investment property?

• 
  DaveT2nd March, 2004

  Yes, if you use your property as a rental for a couple of years, then if you decide to sell it, your property is considered investment property.

• 
  rup2nd March, 2004

  But before you sell it, Talk to a real estate attorney & accountant about a 1031 tax deferred exchange.