Question about insurance, taxes, subleasing and entities

[Lindsay Ferlin]

Hello Bigger Pockets Community,

I am about to close on my 1st real deal- I'll call it an office hack. I live in the Bay Area and work as a psychotherapist. My partner and I are saving money to purchase our first property (hopefully a duplex or triplex so we can house hack). In the meantime, I've come across an office suite in the area that is renting for under market rate. I believe that with a bit of sweat equity and some light rehab that I can make this a great suite for psychotherapists to rent. I plan to rent the suite and then sublet the offices. In addition to making money I think this will be a great project to learn from. My partner and I will get to see how we like working together and we will get experience working with contractors, real estate agents and insurance agents. I am wondering about two things- insurance and tax optimization. I believe that I read somewhere that rental income is not taxed. Does this include people who are subleasing property as opposed to owning and leasing? Or perhaps it all depends what kind of entity we are operating under (S corp, LLC etc). Any resources on tax optimization strategies and determining what sort of entity to operate under would be appreciated! I am also wondering about insurance. The lease says we need property and liability. I currently have malpractice insurance but I believe the owner is meaning something else when he asks for liability insurance?

The owner is aware of my intent to sublease and has also given permission for the alterations I want to make to the suite.

Anything else I should be considering?

People always say to invest in what you know. I know psychotherapy offices! I hope to actually buy a small property to convert in to offices in the future.

Thanks for any input you have.