Passive income is the Holy Grail for online marketers. It's automatic. Effortless. But, not at first. In the beginning, it's grueling. I liken this to doing the most amount of work for the least initial return. However, over time, as your passive income begins to increase, your reliance on an active income plummets. That's when the real magic starts to happen.
You pay two main types of taxes on earned income, Social Security/Medicare taxes (called FICA, OASDI, or payroll taxes), and federal and state income taxes. The payroll taxes that are automatically taken out of your paycheck have two components. First, 12.4 percent of earned income is paid to Social Security. Your employer pays half of this tax, and you pay half. If you are self-employed you'll pay the full 12.4 percent, however, the "employer" portion of 6.2 percent is generally tax deductible.
One of the latest trends is crowdfunding / syndications where money is pooled together to directly invest in various real estate properties.  You do not get quite the variety and diversification you would in a REIT but it provides an opportunity to invest a smaller amount of money than purchasing a property directly.  Usually, you are a limited partner in a partnership.  Since you are not materially involved in the day to day activities, the income generated is passive income.
Another way to obtain real estate exposure in your portfolio is through the purchase of Real Estate Investment Trusts or REITs.  A REIT is a company that owns or finances income- producing real estate.  REITs are usually structured as a mutual fund so you can purchase REITs on major stock exchanges and offer several benefits such as real estate exposure, diversification, low correlation with financial assets, and potentially higher income than regular equities.
Where a CCPC has a RDTOH balance, since it has earned passive income, yet has also earned income that is active not subject to the small business deduction, there is an opportunity to benefit from additional deferral. The income that was taxed at the active tax rate of 26.7% would be eligible to be paid to the shareholder as an eligible dividend (“Eligible Dividend”). When an Eligible Dividend is paid that generates a tax refund from the RDTOH pool of the company, there is a 4% tax savings than if the dividend was not an Eligible Dividend. Profits from passive income do not need to be paid as a dividend that is not an Eligible Dividend to the shareholder for the corporation to recover its RDTOH pool. There is currently no ordering rule or tracking system forcing corporations to declare and pay a dividend that is not an Eligible Dividend taxed at a higher rate in the individual’s hands in order for it to recover its RDTOH.
In expensive cities like San Francisco and New York City, net rental yields can fall as low as 2%. This is a sign that there is a lot of liquidity buying property for property appreciation, and not so much for income generation. This is a riskier proposition than buying property based on rental income. In inexpensive cities, such as those in the Midwest, net rental yields can easily be in the range of 8% – 12%, although appreciation may be slower.
According to NOLO, “the home office deduction is available only if you are running a bona fide business.” That means any work dedicated to your passive income property from the confines of your own home can’t be a hobby. “If the IRS decides that you are indulging a hobby rather than trying to earn a profit, it won’t let you take the home office deduction.”
Earlier this year, the government passed new tax legislation governing Canadian-controlled private corporations (CCPCs), including incorporated professionals. As we enter the final weeks of 2018, one new measure is of particular concern — the potential looming loss of the small business deduction (SBD) in 2019 for corporations with more than $50,000 of passive investment income in 2018.

It is very important to understand that contacting a “professional” to learn how to do this only results in them trying to sell me crap properties (whether high end or low end). I’ve tried contacting realtors out of state, and they attempt to sell me crap or someone else’s problem. No one has a vested interest in actually helping someone or teaching them about how to get an out of state rental. very frustrating. I could go out tomorrow and buy a rental in my city, but that is the last place I want to own one. Anyone? Are there an real people on here?


If your passive activity gross income from significant participation passive activities (defined later) for the tax year is more than your passive activity deductions from those activities for the tax year, those activities shall be treated, solely for purposes of figuring your loss from the activity, as a single activity that doesn’t have a loss for such taxable year. See Significant Participation Passive Activities , later.
This shouldn’t be a surprise. I mean, when I speak to groups and ask how many docs in the room would cut their hours/shifts/call etc if their finances allow it and they all raise their hand. So taking a group of docs who not only have their financial ducks in a row, but also have a side income and pursuit already, why would they be working full-time?
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Investing in coins and collectibles: Buffalo nickels and Spiderman comic books are good examples of coins and collectibles that can rise in value, and thus offer opportunity for passive income investors. You'll need to get up to speed on the value of any coin or collectible under consideration, but once you do so, you're on the way to price appreciation on a commodity you'll be paying a lower price to buy, and will garner a higher price when you sell.
If you are not a real estate professional but oversee your rental real estate, your revenue qualifies as a different type of passive income and you might be able to claim a portion of any losses against active income. As of the 2018 tax season, you can write off up to $25,000 a year in rental real estate losses if your Adjusted Gross Income is $100,000 or less. If your AGI is over the threshold, the size of the loss you can claim goes down by 50 cents for every dollar of income. At an AGI of $150,000, you no longer can take the passive loss against other income.
In mid-2017, I sold my San Francisco rental property for 30X annual gross rent and reinvested $500,000 of the proceeds in real estate crowdfunding. I’m leveraging technology to invest in lower valuation properties with higher net rental yields in the heartland of America. With the new tax policy starting in 2018 capping state income and property tax deductions to $10,000 and limiting interest deduction on mortgages of only $750,000 from $1,000,000, expensive coastal city real estate markets should soften at the expense of non-coastal city real estate.
Haha, that is too funny. I wanted to make an app back in the day called “MyShares” (You can probably tell how I cam up with the name at the time). The idea was that I would loan out books and DVD’s and then would never get them back. Then I thought, how cool would it be if I could rent those items out and that would motivate people to bring them back. Obviously, books and DVD’s are cheap, so this isn’t the money maker. The idea that would probably make the most money would be things like tools, ATVs, etc.
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