![]() On the other hand, if you’re self-renting, which means that you have your own space and that you’re renting it, it doesn’t count as passive income either, unless the agreement has been signed before 1988. To that end, if you’re a real estate professional, then the income generated through rental is regarded as active income – or non-passive income. That’s also because there are some exceptions to the rule. This is why there is an ongoing debate about whether land rental is a passive or non-passive activity. However, renting out a property might not necessarily qualify as 100 percent passive income activity. Moving on, what are some examples of passive income? Rental PropertyĪs already mentioned, the most commonly met example is that of rental property. ![]() So, it is easy to understand the reason why so many people ask: what is passive and non-passive income. As you focus more on generating passive income, you can maximize your earnings over the course of time. This could be referred to as the snowball effect. Perhaps the way in which you can accomplish generating passive income is by continuing to reinvest the income you acquire in other forms of passive income. Simply put, you aren’t actively involved in the daily running of a business to get that sum of money. On the other hand, there is passive income, which stands for revenue you get without being actively involved.įor instance, an example of passive income could be the money you obtain from a rental property. First of all, non-passive income is defined as the revenue you obtain for the work you get paid for by the hour.Īlso referred to as active income, it can be in the form of business income – comprising of the earnings from an investment or business in which you were actively involved. However, before you can do that, you have to understand each concept. Well, the answer is yes, as long as you embrace the right approaches. You’re probably asking: Is there a way in which I could have both passive and non-passive income? Non-Passive Income: What Is the Difference? Final Thoughts on Passive vs Nonpassive Income.
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