I have operated as a real estate dealer for the last 4 years reporting all activity on Schedule C on my personal tax return. I started collecting Social Security and I want to retire as of the end of this year. I still have one developed property unsold. This property will probably have a substantial gain. I would like to convert from a real estate dealer to an investor to offset the potential gain against losses I’ve incurred from the stock market. What are the problems/solutions to this line of reasoning? Thank you.
As a dealer you were an employee. As an investor you are now self-employed.
iF you´re receiving Social >Security, this might be an issue due to the income.
If you don’t mind me asking, did you form a corporation to became a real estate dealer. If so, what kind of corporation did you formed?
The particulars of your situation are unknown but in general you want to separate dealer properties from long term hold property. You can put your hold property in a entity such as an S corp, LLC, or limited partnership so that income flows you you passively.
If the majority of your income the last four years was from those schedule C properties you were a dealer. You, as an individual can stay a dealer. I would suggest you look into a C corp or LLC taxed as a corporation for liability protection.