While these activities fit the popular definition of passive income, they don’t fit the technical definition as outlined by the IRS’s Passive Activity Losses—Real Estate Tax Tips. Passive income, when used as a technical term, is defined as either “net rental income” or “income from a business in which the taxpayer does not materially participate,” and in some cases can include self-charged interest. It goes on to say that passive income “does not include salaries, portfolio, or investment income.”

passive income meaning


Invest in bonds. When you purchase a bond, you are purchasing a loan taken out by a company or a government. The bond issuer holds your money (the price you paid for the bond) for a defined period of time. You receive fixed interest payments, usually twice per year until the term of the bond expires. When the bond expires, the bond issuer pays you back the principal.

How do you rank up on Google?


While these activities fit the popular definition of passive income, they don’t fit the technical definition as outlined by the IRS’s Passive Activity Losses—Real Estate Tax Tips. Passive income, when used as a technical term, is defined as either “net rental income” or “income from a business in which the taxpayer does not materially participate,” and in some cases can include self-charged interest. It goes on to say that passive income “does not include salaries, portfolio, or investment income.”

passive income youtube


I will share what we did, because it’s an incredible success story. We used an existing tax loophole where if you sell your primary residence (after having lived there at least two years) you get to keep your profit tax-free. So, we stair-stepped. We bought house after house, at least two years apart, used the profit money to pay down on the next house (so on and so forth, yadda yadda) building up equity as we went along… and now, we own a $600,000 house debt-free. And now we are using our paid-off home as leverage to borrow money to buy commercial buildings to rent out. I like commercial because it’s a BUSINESS transaction… kids, pets, other wear and tear that you see with residential rentals is nonexistent. People take care of their business space much better than residential. You have to be in a good area for renting out commercial – a thriving business community – to make this work. But that’s how we “made it”, and though it took 15 years, we will have residual income to take care of us when we’re old enough to retire. People made fun of us for moving so much, but who’s laughing now? 😉 Oh, and our child only had to change schools once (and we wanted to anyway) because we stayed in the same general area as we moved around. We were careful not to disrupt his life too much.
Buy entertainment royalties. Royalties are typically paid to the holders on intellectual property for the use of that property. The property can be anything from literature and music to patents on inventions. These royalties can be earned by creating a valuable idea and licensing that idea out. However, other investors can also purchase the rights to these royalties from their creators. This allows the creator to partially or entirely sell their rights to a property, giving them a lump-sum payout and an investor the rights to receive steady royalty payments.
EQ Bank Savings Plus Account 2.45%*-This is one of the highest rates in Canada.  There are no fees, no minimum balance, you get UNLIMITED FREE INTERAC e-TRANSFERS® (my usual bank charges me over $2 each e-transfer!).  There is no physical branch, it is all done online.  It is a trademark of Equitable Bank, which is a Canadian bank that has over $23 billion assets under management.  The maximum balance is $200,000, which is a good problem to have if you have more than that to plunk in a savings account 😉 (they recently increased it from $100,000).  Rates are of course subject to change without notice, so better act fast.  Here’s my review of EQ Bank, I recently signed up.
Do you think it’s possible to build a blog from scratch, outsourcing the work from day one (assuming I have some cash that can cover the initial expenses until the blog generates enough income to at least break even)? In other words, do you think you could you have spent your $500 max per month for the writer, social media expert, etc to build your blog to the point it’s earning the same amount of money it does now?

Decide to invest in dividend stocks. Dividend stocks pay out a portion of the company's profits to shareholders. These dividends are paid at regular intervals, so they produce a regular income stream. Investors who hold a large amount of this type of stock are known as "income investors" because they prioritize regular dividends over stock value growth.[1]

How do I generate passive income?

×