The deduction is optimized as values increase and can potentially offset the entire net investment (including down payment) for high wage earners.

How much did you pay for the note and what do you feel is the current value of the property?

Unless you have a way to source off market deals or have a crew to provide labor for below market value, you're kind of relying on hope and luck to find a deal that works.

Attend local builder associations or networking events, and focus on small contractors or businesses without in-house permit expertise.Highlight how you save time and ensure compliance—it’s a big value-add.

The value generator in commercial is the lease or use of the building.  

Syndication Reporting IssuesMissing Form 8918 for reportable transactionsInconsistent investor disclosuresRequired registrations skippedWhat Doesn't Actually Matter:(Despite What Your Uncle's CPA Says)Special AllocationsNormal promote structuresStandard waterfall provisionsTypical developer promotesReality: Unless extremely aggressive, IRS rarely caresTechnical DocumentationMinor §704(b) gapsCapital account glitchesTechnical allocation languageTruth: Unless hiding something biggerProperty Value AllocationsNormal basis step-upsTypical appreciation splitsStandard promote calculationsReal World Example:🏢 100-unit apartment complex4 partners, $5M dealDeveloper promote structure= Zero IRS interestSame Deal With Red Flags:🏢 100-unit apartment complexHidden partner arrangementsArtificial loss allocationsUnreported debt shifts= IRS AttentionPractical Protection Steps:Basic Documentation✅ Clean operating agreement✅ Economic substance✅ Partner contributions tracked(Don't need War & Peace complexity)Economic Reality✅ Allocations match economics✅ Real money movement✅ Actual partner participationClean Reporting✅ Consistent K-1s✅ Required forms filed✅ Clear communicationThe "Sleep Well" Test:Can you explain your structure to an IRS agent without sweating?

You can get REPS status regardless of how you handle depreciation.Straight Line Depreciation - This is taken 27.5 years on residential and 39 for commercial.Accelerated Depreciation - This requires a cost segregation analysis so you can divide the total value of the building into 5, 7, 15, and 27.5 (or 39) year depreciation buckets.  

Depreciate 75% of the building value (excluding land) over 27.5 years for significant tax savings.

Cash How did you add value to the deal?

and the property had a private dwelling value appraisal much higher than the public property appraiser claims.