Is The Purchase Price of Properties Deductible As An Expense?

[Dave Lion]

I'm considering joining into a partnership with a property manager/realtor to buy/sell/rent property. He wants to form an LLC, in which we are both officers. I will provide all the funds to purchase and fix the properties, while he will manage the repairs, rentals, and finding of new purchase opportunities. He has also laid out a schedule of percentage cuts for each of us. Every month, he will prepare a detailed statement of expenses and income, and send me a check for the net amount of my share, which I presume is taxable income. He says when my original investment is returned, then we split the rest equally.

So, my question:  Is the purchase price of the properties deductible as an expense?  Or how does that work?

For example, say I pay $50,000 to purchase a property and another $50,000 to fix it up.  So, my total investment is $100,000.  We rent it out, and then over the next 10 years, my gross share is $100,000, and thus I have recouped my initial investment.  Then we go to sell the property and it is now worth $200,000, which is split evenly, so we each get $100,000 from the sale.

So, presumably, I'm paying 1/3 taxes during the 10 years of rental income, and so I net about $66,000 during that period.  But at the very end, when we spit the profit from the sale, since my original investment was $100,000 and my share of the sale was $100,000, does that mean I don't owe any real estate or income tax for the sale, making my net return on the entire investment $66,000?

Appreciate any help in clarifying this.

Also, I'm looking for a good accountant who is well versed in handling personal income and real estate tax, so please contact me if you know one. I live in Illinois, and the LLC will be formed in Wisconsin.