In your case, changing the property from a rental to your primary residence constitutes a change in use.The depreciation recapture will be calculated based on the fair market value of the building at the time of conversion, not including the land value.Since you're tearing down the existing structure, the entire amount of depreciation taken over the past two years will likely be recaptured, as the building's value at conversion will effectively be zero.The recaptured amount will be taxed as ordinary income, up to a maximum rate of 25% for residential rental property (Section 1250 property).

I'd be happy to connect. 

Would love to connect and discuss what you're looking to do, my partner and I invest in Phoenix ourselves and can let you know what the returns typically look like.

I want to know is it more cost effective or easier to purchase the property alone and put it in a mortgage in our name or purchase the LLC from him that holds the property within it.

There is a great group of members on here to connect with.

I'd love to connect and always free to answer any questions! 

would love to connect

@Anade DavisHi Anade, You’re on the right track with reaching out to your survey and engineering company—they often have strong connections to local contractors.

By focusing on effective time management, clear communication, building your network, and implementing a solid marketing strategy, you’ll be better prepared to navigate the ups and downs of the real estate industry.

To leverage the equity for financing my next deal, a second mortgage seems like a more cost-effective option.