How many houses can a person buy and sell before they are classified as a "dealer" by the IRS?

Question

I understand that the IRS can consider you a dealer if you buy AND sell and certain number of houses. So what is the number? Bonus points to anyone who can tell me why it is bad to be considered a dealer.

Answer 1

There is not a "magic"number. Under audit, the IRS would look at prior transactions and attempt to determine intent.

The "bad" reason for being a dealer is that all the income is ordinary income and not long-term capital gain. Hence, more taxes on the transaction.

Answer 2

I don't really see how you can give bonus points.


and no.

no one but an IRS agent would have privy to that type of information.