a. What is Income?

Do you know the difference between what the IRS classifies as income and what is NOT classified as income?

For example: If you receive cash on a refinance, is that taxable income to you? Or how about a gift from your mom? Do you pay tax on that receipt of money? The answer to both of these scenarios is Not Income.

Understanding what “IS” and what “IS NOT” income is rewarding knowledge. Properly structuring the receipt of money could save you some serious tax dollars – possibly 50 percent.

There are strategies to avoid or defer income by smartly structuring transactions. You must have an understanding of these possibilities to make the best decision for yourself.

You should understand that there is a difference between Rental Income versus Income from the Sale of New Construction (i.e., Condos). These forms of income are calculated separately and expenses are allocated differently.

Review the following links to familiarize yourself with the common definitions of Income and Not Income.

This is an excellent primer of common “Types of Income” and “Not Income.”

The IRS offers superb guidance. This article defines “What is Considered Rental Income” – good stuff here for rental property owners!!