@Patrick SearsIt’s different for each Individual but if your full time job doesn’t max you out in social security you can look at an S Corp and speak to a CPA to see if there are ways to minimize taxable income.With notes really not much you can do if your looking to sell them vs holding them long term.

Taxable event when the heirs want (or need) to liquidate? 

Im looking for ways to keep my taxable income low, and my monthly cash flow high by leveraging my real estate business. 

@Eric SuessYou may be able to potentially offset rental losses against business income to reduce taxable income.It won't decrease the amount you have to pay in "Self-employment taxes" though.

Of course that option fee is taxable. 

ECI/FDAP can be taxable for exempt organizations.

You will at the very least defer it at the federal level.Without the 1031 exchange - you are looking at paying taxes on depreciation recapture and the appreciation.Depreciation recapture likely won't be a lot since your taxable basis was low.

When you sell the property, all the depreciation you claimed is recaptured and added to your gain, which becomes taxable.

A lot of it depends on what you want to do with the capital and when you want to realize a taxable gain.

Also, if I leave my job, I believe the loan becomes due and if I don't pay it I believe I am subject to a 10 percent penalty as well as a the balance considered income and therefore taxable - basically an early withdrawal.