Bay Area Real Estate Attorney Guides Investors Through “Dealer” Status rules

If you invest in real estate, you need to know the rules regarding “dealer” status.  If you are classified as a dealer, you cannot take advantage of tax deferred exchanges.  Furthermore, your income from the sale of properties will be taxed at ordinary income tax rates instead of the more favorable capital gains rates.  Here are the factors the courts consider:

  1. The nature of your business
  2. Your purpose in acquiring and holding the property
  3. Subdividing, platting, and making improvements that tend to make the property more marketable
  4. The frequency, number, and continuity of sales
  5. The extent to which you engage in sales activity
  6. The length of time the property was held
  7. The substantiality of income derived from the sales and what percentage such income was of your total income
  8. The extent of advertising and other promotional activities
  9. Whether the property was listed directly or through brokers

If you need help with your real estate needs, please call our Menlo Park Real Estate Attorneys for an appointment.  650-422-3313.

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