Theres a number of reasons why that can get pretty technical including basis, distributions, and allocations to shareholders (if you have partners).

Your basis on the property will be allocated between the 2 units and you'll be taxed based on the gain on the half that's sold.

I'd say if your current income can cover your monthly expenses, it's worth allocating some of your savings towards investment funds.

When determining the Section 121 gain exclusion, no gain allocation between business and nonbusiness use is required as long as both the residential and nonresidential portions are within the same dwelling unit.

The income is allocated to all three partners via K-1s.

Investing in CAsetup total $2000over 10 years $26,000+That allows those federal taxes to appreciate and generate cash flow if allocated to a RE property.If the $345K can appreciate/earn 5% per year in two years, you are already in profit.$17,250+ per year, over 10 years $173K, plus the appreciation of the property.

Or if the client is trying to sell a mixed use asset like a convenience store restaurant or motel, they will frequently try  to negotiate higher allocation to the land and building and a lower allocation to the FFE (fixtures and equipment) since only the land and building can be included in a 1031 exchange.When and if you finally sell without a 1031 exchange a higher land value can certainly be a huge tax mitigator!

@James HedgecockThe great thing about partnerships / LLC is that the partnership allocation can be whatever you want for it.There is a difference between capital account / capital percentage and profit /loss percentages.In theory, a partner can put in 0% of the capital but be entitled to 20% of the profit / loss.Best of luck to you.

Just trying to be as specific in allocating tasks in a JV LLC agreement to hold people accountable.

Should I increase my property management allocation?