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Investing in real estate has been around for ages.  Whether you are looking to buy your first duplex or getting into a large commercial property, rental properties can provide passive income through rents with some very appealing tax benefits.  This method can be harder to get started with given the initial capital needed in most cases, but is certainly a great way to generate passive income.

Passive income differs from active income which is defined as any earned income including all the taxable income and wages the earner get from working. Linear active income refers to one constantly needed to stay active to maintain the stream of income, and once an individual chooses to stop working the income will also stop, examples of active income include wages, self-employment income, martial participation in s corp, partnership.[4] portfolio income is derived from investments and includes capital gains, interest, dividends, and royalties.[5]
Investing in real estate: Investing in real estate offers more passive income cash potential - but more risk - than investing in stocks or bonds. You'll need substantial amounts of cash to invest in buying a home -- it usually takes 20% down to land a good home mortgage loan. But history shows that home prices usually rise over time, so buying home a for $200,000 and selling it for $250,000 over a five-year time period, for example, is a reasonable expectation when investing in real estate.

Qualified dividends are taxed the same as long-term capital gains. In 2018, you can earn up to $38,600 in ordinary income without being taxed on long-term capital gains or qualified dividends. If you earn between $38,600 and $425,800 in ordinary income, your long-term capital gains tax rate is 15 percent, which would also apply to qualified dividends. If you make more than $425,800, the rate is 20 percent.


Like many of the people, you probably think that you need a lot of money to get stated in the stock market, no it is not true. Of course, it is better if you have a nice amount of money to invest, but our goal here is to create passive income, we want our money to work for us. Unlike day trader, the stock market won’t be our primary financial activity; we will just try to create passive income sources.
There’s stock and then there’s blue-chip stock. In poker, the blue chips are the most expensive. In the stock market, blue-chip stocks are considered more valuable and less risky than lower-priced stocks. These stocks belong to well-known companies like Facebook, Google, Johnson & Johnson, and so on. Due to the massive success of these corporations, they pay shareholders lucrative dividends. A single blue-chip stock can cost well over $500. If you can find the money, the quarterly or annual dividend payments would amount to generous passive income you can rely on. Though these stocks are considered more lucrative, all investments involve risk. Lehman Brothers’ stock was solidly blue- chip until the financial crises tanked the company. Keep that in mind when investing in this type of stock.  There are no guarantees in the stock market – only educated guesses.

One of the easiest ways to get exposure to dividend stocks is to buy ETFs like DVY, VYM, and NOBL or index funds. You can also pay an algorithmic advisor like Wealthfront to automatically invest your money for you at a low fee. In the long run, it is very hard to outperform any index, therefore, the key is to pay the lowest fees possible while being invested in the market. Wealthfront charges $0 in fees for the first $15,000 and only 0.25% for any money over $10,000. Invest your idle money cheaply, instead of letting it lose purchasing power due to inflation. The key is to invest regularly.


When you retire you will make a shift from relying on earned income to relying on unearned income. Because tax treatment will vary depending on the income source, it is best to have money available from multiple sources such as tax-free accounts like Roth IRAs, after-tax accounts like savings and investments in brokerage accounts, and tax-deferred accounts like IRAs and 401(k)s.
My grandfather knows how to cook because he is old he have in mind a lot of unique recipes from his childhood. He created a Youtube channel and explain how to make some of the recipes he know. Some of his video has 500K views, and are getting new views every day. If you read the book Rich Dad Poor Dad, you will understand better what I’m about to explain. You can see Youtube as your primary income, then you will work a full time job. But you also can use Youtube as a passive income. You will make less money but you won’t need to post a video every single day. Just create ‘Assets’, take your videos as assets, more you will have more money you will make.
If an investor puts $500,000 into a candy store with the agreement that the owners would pay the investor a percentage of earnings, that would be considered passive income as long as the investor does not participate in the operation of the business in any meaningful way other than placing the investment. The IRS states, however, that if the investor did help manage the company with the owners, the investor's income could be seen as active since the investor provided "material participation." 
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This is simple. Do your research and choose a paid price point. Once your app is released you can tweak your pricing to find the optimal value. From personal experience, I’ve noticed I generally make more money when choosing to go the premium route vs the budget route. Meaning, I price the app higher than my competitors to let them know they are purchasing a more premium product. Of course, this is not always the case. Sometimes the $0.99 apps do better since they generate more downloads and climb the app rankings easier. Higher app ranking means more visibility.
Any loss that’s allowable in a particular year reduces your at-risk investment (but not below zero) as of the beginning of the next tax year and in all succeeding tax years for that activity. If you have a loss that’s more than your at-risk amount, the loss disallowed won’t be allowed in later years unless you increase your at-risk amount. Losses that are suspended because they’re greater than your investment that’s at risk are treated as a deduction for the activity in the following year. Consequently, if your amount at risk increases in later years, you may deduct previously suspended losses to the extent that the increases in your amount at risk exceed your losses in later years. However, your deduction of suspended losses may be limited by the passive loss rules.
Venture debt ($12,240 a year): The first venture-debt fund has returned almost all my initial capital, so I decided to invest $200,000 in the second fund. I took a risk investing $150,000 in my friend's first fund, so I'm hoping there's less risk in the second fund, given he has four more years of experience on top of his 12-plus years of experience running a venture-debt portfolio for another company.
Take for example a situation where a CCPC earns rental income from its real estate properties which for this example qualifies as passive investment income and provides, at the same time, property management services that are characterized as active income. Under the current regime, a portion of the high corporate income tax paid by the corporation of 50% on its rental operations is accumulated in its RDTOH and will be refunded by the government only upon the payment of a dividend by the corporation to its individual shareholder. Given that an Eligible Dividend paid out of the property management services are taxed at a lower rate than would be a dividend paid out of the rental income, being a dividend that is not an Eligible Dividend, the company would decide to pay the Eligible Dividend and recover the RDTOH generated from its passive income. The profits generated from the rental operations could be paid to the shareholder the following year or two for example as a dividend that is not an Eligible Dividend, thus providing for a deferral of that additional 4% personal income tax.

The PPACA Medicare tax is a dangerous tax IMHO. It is an entirely new kind of tax. It is small and in jeopardy of going away but I predict it won’t. If it goes away it won’t be for long and it will grow over time – like most taxes. 3.8% is a starting point. This one has the added political appeal of “taxing the rich” and “unearned income” that makes it more palatable to the electorate.
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.
If you qualified as a real estate professional for 2017, report income or losses from rental real estate activities in which you materially participated as nonpassive income or losses, and complete line 43 of Schedule E (Form 1040). If you also have an unallowed loss from these activities from an earlier year when you didn’t qualify, see Treatment of former passive activities under Passive Activities, earlier.
Gain on the disposition of an interest in property generally is passive activity income if, at the time of the disposition, the property was used in an activity that was a passive activity in the year of disposition. The gain generally isn’t passive activity income if, at the time of disposition, the property was used in an activity that wasn’t a passive activity in the year of disposition. An exception to this general rule may apply if you previously used the property in a different activity.

The great thing about this program is that you can run their browser on as many devices as you want. With just one device, you can earn $65 per year assuming you leave it running constantly. The only condition is that you must have each device running on a unique IP address. You can either get multiple IPs or request a family member or friend run the same link for you.

If you sell an asset like a stock or mutual fund at a price that is higher than the amount you paid, the difference or profit you realize is a capital gain. Capital gains are divided into two categories: short-term gains and long-term gains. Short-term gains are profits realized from the sale of assets you hold a year or less, while long-term gains are profits gained from selling assets you hold longer than a year.
“I don’t believe the overnight success exists. There’s a lot of hard work and time involved beforehand,” say Flynn. Angry Birds may have seemed like an overnight success but it was the 52nd game that Rovio created. Flynn says it took him a year or year and a half to build audiences for his most successful sites. (Read these time management expert's tips on the work habits of successful people.)
Hello, I have just started my own blog this week. I too have read a lot of Rich Dad Poor Dad’s books and the 4 Hour Work Week and am hoping to be on the same path as you. I love your blog! Everything looks great. I am still learning— so much to figure out! My blog is bettybordeauxdoesitall.com. I have to be anonymous because of my job. Thanks for the inspiration and best you!
If all or any part of your loss from an activity is disallowed under Allocation of disallowed passive activity loss among activities for the tax year, a ratable portion of each of your passive activity deductions (defined later), other than an excluded deduction (defined below) from such activity is disallowed. The ratable portion of a passive activity deduction is the amount of the disallowed portion of the loss from the activity for the tax year multiplied by the fraction obtained by dividing:
Go to IRS.gov/Forms to view, download, or print all of the forms and publications you may need. You can also download and view popular tax publications and instructions (including the 1040 instructions) on mobile devices as an eBook at no charge. Or, you can go to IRS.gov/OrderForms to place an order and have forms mailed to you within 10 business days.
Good suggestions. I have many of these. One word about the “app” idea. I had a great idea related to personal taxes that I tried to get off the ground with my accountant as a partner. I would say it’s difficult to do this unless you have a coder on your team. Hiring someone is not really viable financially unless the app is simple. When we finally got the quote for a coder to write what we wanted (and after doing lots of mock ups ourselves and getting a demo for investors) the estimate was about 750k just to really get started.
I’m confused by your reference to passive income. Passive income doesn’t mean totally free money or money earned without work although you make several references to making money in your sleep without any effort. Now, I understand the concept of passive income but I have to believe that you must still work to obtain that passive investment/ income and then work to maintain it right? Owning a company, in itself, is a lot of work and is thus still considered a JOB right? It’s not till after a lot of blood sweat and tears that one can reach a point where they can say theyve achieved financial freedom with passive income. Maybe you can add a little clarity for me. I’m only in my beginning stages of real estate investing and read as much as I can to learn.
The U.S. Internal Revenue Service categorizes income into three broad types, active income, passive income, and portfolio income.[1] It defines passive income as only coming from two sources: rental activity or "trade or business activities in which you do not materially participate."[2][3] Other financial and government institutions also recognize it as an income obtained as a result of capital growth or in relation to negative gearing. Passive income is usually taxable.
The organizing principle behind this grouping, appropriate economic units, is relatively simple: if the activities are located in the same geographic area; if the activities have similarities in the types of business; or if the activities are somehow interdependent, for instance, if they have the same customers, employees or use a single set of books for accounting.

First: I understand why you would say that such investments are restricted to only accredited investors, because generally, that’s true. There are means, under federal securities regulations and Blue Sky laws in each state, to sell interests to non-accredited investors – but usually those means are so heavily regulated and involve disclosures so similar to cumbersome registration requirements that it is not worth it for the seller to offer to non-accredited investors.
Passive income differs from active income which is defined as any earned income including all the taxable income and wages the earner get from working. Linear active income refers to one constantly needed to stay active to maintain the stream of income, and once an individual chooses to stop working the income will also stop, examples of active income include wages, self-employment income, martial participation in s corp, partnership.[4] portfolio income is derived from investments and includes capital gains, interest, dividends, and royalties.[5]
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That strategy seems waaaayyyy less risky than actively picking stocks of supposedly “reliable” stocks that issue dividends, which could be cut at any time due to shifting industry trends and company performance. Dividend investing feels like an overly complex old-school way of investing that doesn’t have a very strong intellectual basis compared to index investing.

If you love design and you are an artistic person, selling digital products on Etsy could be a great way to earn passive income. Digital products require little maintenance, your customers will simply receive a link to download them (which means you don’t have to worry about shipping and returns handling). All you need to do is spend time upfront to create beautiful artwork! (Easy right?)


If you love design and you are an artistic person, selling digital products on Etsy could be a great way to earn passive income. Digital products require little maintenance, your customers will simply receive a link to download them (which means you don’t have to worry about shipping and returns handling). All you need to do is spend time upfront to create beautiful artwork! (Easy right?)

Unearned income is not subject to payroll taxes. This is good news! However unearned income sources are included in your calculation of Adjusted Gross Income (AGI) for federal income tax purposes. You can find your AGI on line 37 of your 1040 tax form. Most unearned income such as interest income from CDs or savings accounts, IRA withdrawals, and pension payments are taxed at your marginal tax rate. However, certain types of unearned income, such as capital gains and qualified dividends are taxed at a lower rate.
Passive income is also not subjected to self-employment taxes. But similar to portfolio income, it might be subject to the Net Investment Income tax. So, if you own a rental house, the income generated from the rental house is considered passive income. As a side note, taxpayers used to label themselves as Real Estate Professionals under IRS definition to allow passive losses to be deducted; now we are seeing the same label to avoid Net Investment Income tax on rental income.
Finance was concerned that notwithstanding protective provisions in the law to safe guard against this tax deferral, professionals and other groups were using corporations exclusively for the purposes of gaining this benefit. This platform of concern for politically correct fairness and equity however did not address the fact that the after-tax profits of a corporation distributed to the individual are subject to a second layer of tax when the individual is paid a dividend from the company. As such, when Ms. Shareholder ultimately receives a dividend from the CCPC of its retained earnings, she will have paid a combined corporate and personal tax of approximately 56%, which is about 3 points higher than the top marginal rate applicable to individuals. The objective of the second layer of tax is to achieve what historically was called the principle of integration.
You could also make some passive income with medium involvement by investing in dividend stocks. This means you buy stocks that pay out dividends. You’ll have to do your research to find the best dividend stocks. That way, you can ensure that your dividend payouts will last for a while. Similarly, you could simply open a high yield savings account or build a CD ladder. Again, you’ll have to do your research to find the right ones and keep an eye on the accounts to make it a successful source of income.
Another benefit of investing in rental properties is the loan pay down. If you obtain a loan to buy the property, each month your tenants are paying off part of the loan. Once the mortgage on the property has been paid off, your cash flow will increase dramatically, allowing your mediocre investment to skyrocket into a full-fledged retirement program.
To explain, $150,000 in passive income is roughly equal to $3 million worth of investments, assuming an average interest rate of 5%. This means that unless your clients are holding millions of dollars worth of investments, they shouldn’t need to worry about losing their small business tax rate. If you’re working with clients whose businesses are this large and they’re concerned about being taxed at the corporate rate, you may encourage them to sell off some of those investments and spend more time developing their active income streams. But for businesses of this size, the corporate tax rate shouldn’t be much of a problem.
The new rules may not impact you much unless you have a sizeable passive investment portfolio in your corporation. Keep in mind that a $1 million corporate investment portfolio which  generates a 7% rate of return will generate $70,000 of return, but not all of that return may be taxable as a portion could be attributable to unrealized appreciation from stocks, for example.
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Domain names cannot be replicated. If one is taken, the only recourse would be to approach the owner to discuss a sale. While there are other variations you could choose, sometimes owning a certain domain (especially if it is attached to your business) can be worth the premium. Often, people will scout out domain names that are still available, buy them, and then sit on them in order to sell them down the road. Depending on who may want the domain down the road, you could sell it for a large markup.


Active participation depends on all the facts and circumstances. Factors that indicate active participation include making decisions involving the operation or management of the activity, performing services for the activity, and hiring and discharging employees. Factors that indicate a lack of active participation include lack of control in managing and operating the activity, having authority only to discharge the manager of the activity, and having a manager of the activity who is an independent contractor rather than an employee.
This one may seem simple, but that’s only because it is. If you were to move your savings from a traditional, brick-and-mortar bank with a low-interest rate and into a high-yield savings account online, over time you can make a surprising amount of extra cash. Online banks are FDIC-insured just like the traditional brick-and-mortar institutions, so your money is just as safe.

Wow! What an awesome list! My favorite is the stock photography because I love photography. I have had some success there, particularly with one photo I make some decent income from. I think the key with stock photography is finding a shot that is high demand. Then, find a new unique way to frame that shot. This is the reason my St. Louis Arch photo is a top 10 on both ShutterStock and iStockPhoto. Thanks for the awesome ideas above!

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