Avoiding Dealer Status – Why Intent & Structure Matter

Neerja Kwatra
Oct 28
1 min read

The IRS labels frequent builders and flippers as “dealers.” That label disqualifies them from capital gains, installment sales, and 1031 exchanges.

To Stay an Investor:

Use distinct LLCs for active vs. passive holdings.
Avoid listing property for sale too early.
Hold some properties for rental or appreciation.

💡 Key Takeaway: You control your tax treatment with your structure and patterns. Separate your long-term wealth from your development profits.

⚠️ This blog is for informational purposes only and does not constitute tax, legal, or accounting advice. Please consult your CPA for guidance specific to your situation.

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