Refinancing UBTI Question

[Toshiki Hoshino]

Hello BP,

What are you tax consequences on below situation purchasing property under Checkbook LLC.

Purchased owner financing commercial property with 2 partners (33% ownership each) for $1,250,000 with down payment of $200,000. If we incorporate BRRRR strategy because property is worth $1,950,000 and bank allows 65%LTV, what would be my UBTI obligation when I refinance?

From my understanding, rental income will be subject to UBTI by income minus expenses and depreciation. Is that correct?

Thank you,

Tosh