Fix and Flip

Well, here goes. As opposed to "buy and hold" rental properties, "fix and flips" need a different strategy.

Why? Rental generates passive income (no 15.3% self-employment taxes), while the short term capital gains that result from a flip can be termed earned or active income by the IRS. That adds the 15.3% employment taxes (ouch!) on top of the ordinary income taxes that you will pay.

Our alternative strategy focuses on reducing that 15.3% bite.

Definition:
1. A General Partner earns active income and holds all of the liability for a transaction.
2. A Limited Partner earns passive income and has no control or liability for a transaction (think shareholders)

Creative use of these facts provide the basis for a great strategy, and also let you selectively embrace the much maligned "Dealer Status".

Bye for now - more holiday shopping to do,

Smokey