Congratulations, you get to share your partners tax burden and pay the depreciation recapture at ordinary income rates. 

The fact that you have a TAX-FREE income is crazy good.  

Of course to maximize your tax benefit it needs to be sustainable over time. 

Since the loan is still in your name, you can deduct the interest you’re paying to the lenderon your tax return... 

My strategy incorporates asset protection measures like LLCs, specific trusts as well as professional property management to spread risk and ensure quality operations.As well as using tax codes to my benfiitSection 179, IRC Section 162, Cost Segregation and Bonus Depreciation and later 1031 them out for larger projects. 

Your actual property taxes alone on that will be over $10K a year in 2025 and don't forget about that supplement tax headed your way.I would suggest keeping the others and maybe changing to LTR if that will give you consistent cash flows.  

Forming an LLC for your rental property can offer liability protection, but no real tax benefit.

Is an IRA subject to capital gains tax?

The use of the accelerated depreciation strategy helps real estate investors to reduce the tax liability immediately which therefore increases their bottom line due to the offsetting of income.

But the IRS has said that it is not appropriate to purchase from a related party when the purchase is an attempt to avoid tax.