Ordinary Income Vs. Capital Gains

[mccarthymj 0]

Greetings from New England. I am approaching builders with the idea of CA. It would be huge advantage to a builder to complete a home and lease it if, when sold it their profit was treated as a capital gain instead of ordinary income. How long would they have to hold? Is this even possible? I was hooked by Bev's posting in another forum about dealing with this exact situation. (Doing CAs w/New houses built by investors) My guy is a little shady on his answer on this. I would be interested in a professional opinion.

 

Mike

[Dave T 0]

Mike,

 

If you want a professional opinion, you need to contact a licensed professional in your area that has some expertise in this niche. See the disclaimer in the pinned topic titled "What This Forum Is, and Isn't"

 

If you want my opinion, however, a builder's inventory (the houses he builds, then sells) is merchandise to his business. Ordinary income tax treatment applies when he sells his merchandise regardless of his holding period.

 

What shady answer did your guy give you?

[mccarthymj 0]

Something about holding for 2 years, but I think that is for a builders personal residence. One way or another, I am obviously trying to fine a legitimate way to make the CA or LO process more attractive to builders. Any other angles?

 

Mike

[MichaelC 160]

One way or another, I am obviously trying to fine a legitimate way to make the CA or LO process more attractive to builders. Any other angles?

Mike, this forum deals specifically with the tax aspects of your question and your real estate activities. I think you'd get a better response to the above question in the Marketing Forum.

[mccarthymj 0]

Thanks Mike, looks like the question's answer is pretty plain. I will move over to marketing.

 

M