Full disclosure, I have a background in mental health and addiction treatment so I may be in the minority here.

.- If the investor was just loaning the money to the contractor for fixed returns, then the tax treatment would be different.

It has all to do with the risks associated with an investment vs. the almost guaranteed returns from paying off the debt.Note that when you do the math you do have to adjust for the tax treatment if you really want to be precise about all of this.Coming back to the initial point.

This book store is subject to "unrelated business income tax" on the profit from the bookstore even though the university is a non-profit entity.An traditional IRA falls into the same treatment.

If the property you sold is investment or personal use property installment sale tax treatment applies to the portion of the sale price that you finance under both accounting methods.

. :) But seriously, there are so many traps to SDIRAs in RE; every SDIRA file I've reviewed the client / potential client has done something that would likely invalidate the tax treatment of the entire account on audit.

If you are on your own well water, talk to your plumbing supply house about plumbers that specialize in water treatment systems that could come out and check your water.

No special treatment for RE pro  in CA. 

@Carson SweezyA primary residence is specifically excluded from 1031 treatment.

IMO, there's no one best election, which is why I have multiple series w/ different IRS statuses, and perform the activities in the entities where I get the most favorable tax treatment.