Passive Income
“Passive income is a rent received on a regular basis, with little effort required to maintain it. It is advocated by some authors, especially by Robert Kiyosaki.
Some examples of passive income are:
* Repeated regular income, earned by a sales person, generated from the payment of a product or service that must be renewed on a regular basis, in order to continue receiving its benefits - also called residual income.
* Rental from property;
* Royalties from publishing a book or from licensing a patent or other form of intellectual property;
* Earnings from internet advertisement on your websites;
* Earnings from a business that does not require direct involvement from the owner or merchant;
* Dividend and interest income from owning securities, such as stocks and bonds, are usually referred to as portfolio income, which can be considered a form of passive income;
* Pensions.
Passive income is usually taxable. The American Internal Revenue Service defines passive income as “”any activity… in which the taxpayer does not materially participate.”" [1] Other financial and government institutions also recognize it as an income obtained as a result of capital growth or in relation to negative gearing.”