Q: I own six e-commerce stores that run themselves. I rent them out. is this unearned passive income?
The people who rent them out. Order all the products and they ship out all the orders. I host the website and every 4 years I pay for the hosting fee. I do not do any work on the sites. They stay the same.
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A:
Yes, the income you receive from renting out your e-commerce stores is generally considered unearned passive income. Since you’re not actively involved in the daily operations, managing orders, or shipping products, your role is limited to owning the assets and handling minimal tasks like hosting fees.
Passive income typically includes earnings from rental activities where you don’t materially participate. In your case, the renters manage the businesses independently, which aligns with the definition of passive income. This setup allows you to earn money without the need for active involvement in the business processes.
However, tax laws can be complex and may have specific requirements or exceptions. It’s a good idea to consult with a tax professional to ensure that your income is classified correctly and to understand any potential tax implications related to your rental arrangements.
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