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In Raleigh-Durham NC area, people do the simple maneuver of converting your personal residence to a rental property. This maneuver brings with it many tax rules, mostly good when you know how they work.

The in-game currency can be converted to real life cash, and you can earn in-game currency in a number of different ways. The currency of Second Life is called Linden dollar, and the exchange rate varies depending on the market. Convert Second Life Linked Prims to Meshes In-world; Convenient and Easy to Use; Dynamic 3D Web-Viewer; Exports.DAE Collada Format XML files to Be Imported Back Into The Second Life; Changeable Vertex Resolutions With Real-Time Preview.

The first question that arises when you convert a personal residence into a rental is how to determine the property’s tax basis for depreciation purposes during the rental period and for gain/loss purposes when you eventually sell.

Weirdly enough, two different basis rules apply:

If, after conversion to a rental, you sell at a gain, your basis on the conversion date is the usual computed amount (cost of home plus improvements, minus depreciation—such as from a home office).
If, after conversion to a rental, you sell at a loss, your basis on the conversion date is the lesser of the computed basis or the fair market value.

Once you’ve converted a former personal residence into a rental, you must follow the tax rules for landlords. Here is a quick summary of the most important things to know:

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You can deduct mortgage interest and real estate taxes on a rental property.
You can also write off all the standard operating expenses that go along with owning a rental property: utilities, insurance, repairs and maintenance, yard care, association fees, and so forth.
Finally, you can also depreciate the cost of a residential building over 27.5 years, even while it is (you hope) increasing in value.

If your rental property throws off a tax loss, things can get complicated.

The so-called passive activity loss (PAL) rules will usually apply. In general, the PAL rules allow you to deduct passive losses only to the extent you have passive income from other sources, such as positive income from other rental properties or gains from selling them.

Eventually your rental property should start throwing off positive taxable income instead of losses, because escalating rents will surpass your deductible expenses. Of course, you must pay income taxes on those profits. But if you piled up suspended passive losses in earlier years, you now get to use them to offset your passive profits.

Another nice thing: positive taxable income from rental real estate is not hit with the dreaded self-employment (SE) tax, which applies to most other unincorporated profit-making ventures. The SE tax rate can be up to 15.3 percent, so it’s a wonderful thing when you don’t have to pay it.

One other good thing is that your net rental profits may qualify for the Section 199A deduction.

Another good thing is that if your rental property rises to the level of a trade or business, your rental profits avoid getting socked with the 3.8 percent net investment income tax (NIIT).

When you sell a rental property that you’ve owned for more than one year, the profit (the difference between the net sales proceeds and the tax basis of the property after subtracting depreciation deductions during the rental period) is generally treated as a long-term capital gain.

Always keep in mind the good news here. You don’t pay the taxes on the property appreciation until you sell.

Remember those suspended passive losses we mentioned above? The suspended losses are ordinary losses. When you sell a rental, you can find two great benefits:

Gains are tax-favored capital gains.
And then, to the extent of your gains, you release suspected passive losses that offset ordinary income.

And always keep this in mind: rental real estate owners can avoid taxes indefinitely using Section 1031 exchanges (named after the applicable section of our beloved Internal Revenue Code).

The tax code totally mislabeled the 1031 exchange. It’s absolutely not an exchange or a swap. It works like this:

You sell your property.
You buy a new, more expensive property.
Your Section 1031 exchange intermediary (such as a bank or title) handles the paperwork, and that makes the taxes go away.

If you are considering converting your home into a rental property and would like my advice on the conversion, please call me on my direct line at 919-354-0368.

Posted by Allison on 1 April 2009, 16:15

Gone are the days when games were just games and they were only played by kids. Nowadays you can actually earn a fortune by playing them – if you know what you are doing.

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The online universe called Second Life consists of millions of residents who live through avatars on screen. They can interact with other people masquerading as other avatars, and while calling it a game isn't really doing it justice, it is the place where one woman has made it to millionaire status in recent months.

Just as with our everyday lives, the Second Life universe has its own currency. While this isn't related to any real world currency you might find – and it certainly isn't listed on any currency converter on any regular sites – it does have an exchange rate pegged to the US dollar, and Linden dollars exchange hands every day over and over again.

So how did this woman manage to become a real millionaire through her interaction with this online community?

To find out the story of Anshe Chung (the name of her avatar, not her real one, as she has decided to remain understandably private), it is necessary to understand how Second Life works. The one thing that will strike you if you aren't already a member is that it has striking similarities with how you can make money in real life.

Anshe's secret – if it is one – lies in real estate. But instead of buying it in the real world she buys it in the Second Life world, before building on it and renting it to other people. You can find out more about her success in the Business Week article which can be found at http://www.businessweek.com/magazine/content/06_18/b3982001.htm, as well as visiting her website at http://www.anshechung.com/include/press/press_release251106.html. It is a fascinating story, and one that is well worth the read.

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So could you follow in her footsteps?

Well there is no doubt that while she is clearly the highest earning person on the site, she isn't the only one making a full time income from it. You only need to go to this page on the Second Life website - http://secondlife.com/whatis/businesses.php - to see just how many people there are in various different walks of life and businesses, all making a living from Linden dollars. And because those dollars can be exchanged for real life dollars (and then into your own currency if you wish), there is every chance that you could indeed build a business in a virtual world that has benefits in our real one as well.

It's certainly a fascinating concept that has clearly caught on with a lot of people. There is no doubt that some become members just to have fun and explore the site, but the fact that you can also make money from it and let your entrepreneurial skills run rampant is very attractive for a lot of other people as well.

Perhaps it is the fact that you can do things on the site that you may not be able to do in real life that makes it so attractive – as well as the fact that you can look however you want to and call yourself by a different name too!

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What could be more enticing than that?

In Raleigh-Durham NC area, people do the simple maneuver of converting your personal residence to a rental property. This maneuver brings with it many tax rules, mostly good when you know how they work.

The first question that arises when you convert a personal residence into a rental is how to determine the property’s tax basis for depreciation purposes during the rental period and for gain/loss purposes when you eventually sell.

Weirdly enough, two different basis rules apply:

If, after conversion to a rental, you sell at a gain, your basis on the conversion date is the usual computed amount (cost of home plus improvements, minus depreciation—such as from a home office).

If, after conversion to a rental, you sell at a loss, your basis on the conversion date is the lesser of the computed basis or the fair market value.

Once you’ve converted a former personal residence into a rental, you must follow the tax rules for landlords. Here is a quick summary of the most important things to know:

Convert Money Uk

You can deduct mortgage interest and real estate taxes on a rental property.

You can also write off all the standard operating expenses that go along with owning a rental property: utilities, insurance, repairs and maintenance, yard care, association fees, and so forth.

Finally, you can also depreciate the cost of a residential building over 27.5 years, even while it is (you hope) increasing in value.

If your rental property throws off a tax loss, things can get complicated.

The so-called passive activity loss (PAL) rules will usually apply. In general, the PAL rules allow you to deduct passive losses only to the extent you have passive income from other sources, such as positive income from other rental properties or gains from selling them.

Another nice thing: positive taxable income from rental real estate is not hit with the dreaded self-employment (SE) tax, which applies to most other unincorporated profit-making ventures. The SE tax rate can be up to 15.3 percent, so it’s a wonderful thing when you don’t have to pay it.

One other good thing is that your net rental profits may qualify for the Section 199A deduction.

Another good thing is that if your rental property rises to the level of a trade or business, your rental profits avoid getting socked with the 3.8 percent net investment income tax (NIIT).

When you sell a rental property that you’ve owned for more than one year, the profit (the difference between the net sales proceeds and the tax basis of the property after subtracting depreciation deductions during the rental period) is generally treated as a long-term capital gain.

Always keep in mind the good news here. You don’t pay the taxes on the property appreciation until you sell.

Remember those suspended passive losses we mentioned above? The suspended losses are ordinary losses. When you sell a rental, you can find two great benefits:

Gains are tax-favored capital gains.

And then, to the extent of your gains, you release suspected passive losses that offset ordinary income.

And always keep this in mind: rental real estate owners can avoid taxes indefinitely using Section 1031 exchanges (named after the applicable section of our beloved Internal Revenue Code).

The tax code totally mislabeled the 1031 exchange. It’s absolutely not an exchange or a swap. It works like this:

You sell your property.

You buy a new, more expensive property.

Your Section 1031 exchange intermediary (such as a bank or title) handles the paperwork, and that makes the taxes go away.

If you are considering converting your home into a rental property and would like my advice on the conversion, please call me on my direct line at 919-354-0368.

How To Convert Money Formula

Convert Money To Today Value

Second Life Money To Real Money

Convert Money To Words

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