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.
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.