I bought a house over a year ago and have been working on it to rehab and sell. Due to illness and a death in my family, this rehab did not take priority. I am now finishing up the rehab (it is in my entities name)and plan to sell. I was recently told that because I held it for over a year, it would be considered inventory and the profit will be earned income not passive income. Have any other investors dealt with this. Should I rent then sell in order to avoid this problem?
I bought a house over a year ago and have been working on it to rehab and sell. Due to illness and a death in my family, this rehab did not take priority. I am now finishing up the rehab (it is in my entities name)and plan to sell. I was recently told that because I held it for over a year, it would be considered inventory and the profit will be earned income not passive income. Have any other investors dealt with this. Should I rent then sell in order to avoid this problem?