Passive Income Definition

Definition of passive income

Income from rent, limited partnership or other sources of income (in which the earner is not actively involved), without salary, wage, interest or capital gain. Passive income can also be written off against passive losses. The tax law distinguishes between active and passive income. Portfolio income, which includes income from investments, is another type of income. A passive income is an income that you receive regularly and that requires little or no effort.

Liable income

Shareholding in a company. This is a particular type of income (losses) from passive operations, which includes property, partnership and other types of tax-privileged assets. In deducting passive deficits from assets such as pay, salary and retirement income, the investor is restricted. Liable income. Accumulate passive income from certain companies in which you are not actively involved.

Typically, you can involve Kommanditgesellschaften in which you are a general limited partner, rented properties that you own but do not own, and other businesses in which you are an investment but have a hands-off-relation. If, for example, you are investing as a general partner, you realise passive income or passive loss because you are not involved in the operation of the business and have no say in the general partner's choices.

Income from the rental of properties is also regarded as passive income in some cases. Secondly, any income you make or realise with your equity, bond and fund asset management portfolios is regarded as earned income. Expenses that you incur by the sale of assets in your account are also capitalized capital gains.

The Internal Revenue Service (IRS) rules distinguish between passive and inactive income (and losses) and allow you to set off passive income only against passive loss and inactive income against inactive loss. Look at income from passive work. Deferred income is income from operations in which the taxable person has no material interest, as well as most leasing operations.

Also see Major Shareholdings and Portfolio Income.

Definition of passive income

Fiscal legislation differentiates between assets and liabilities. Yields on investment or operations that necessitate the taxpayer's continuing efforts are regarded as earned income. Take into account the return on investment or operations that do not involve taxpayers or only a small proportion of them. A further income category is the income from portfolios, which contains income from capital investment.

This is mainly due to the fact that passive loss cannot be subtracted from asset or project income. Accrued expenses can only be subtracted from passive income. When passive loss arises, if the taxable person has no passive income, then these loss can be brought forward to a year in which the taxable person has offset the passive income.

Any other source of income that does not involve significant taxpayers.

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