Regarding the long-term implications of using rental properties to offset your W2 income with depreciation:Depreciation Recapture and Tax PlanningDepreciation Recapture: When you sell a rental property, you'll face depreciation recapture taxes on the portion of the gain attributable to depreciation deductions taken.

Make sure your accountant knows you lived in it for 2 years of the last 5 to avoid that cap gains tax.

I appreciate that, I definitely need to gain more understanding on the management side as well.

(If you sell and don't 1031 the property, then you'd have capital gains taxes too if held for over a year, personal income taxes if under a year.)Property taxes should be looked at as an operating expense.

A 1031 Exchange only defers the capital gains tax.

My plan is to move out in two years after I qualify for the possible capital gain tax exclusion so then I can either decide to keep it for 3 additional years (or maybe longer, and forgo the exclusion)and move the home into a LLC.

“Activities may be grouped if they constitute an appropriate economic unit for measuring gain or loss.”

There is a legal doctrine known as "adverse possession" by which trespassers who openly inhabit and improve a piece of property that is otherwise abandoned may gain title to that property after some specific conditions are met.

Ask the questions...Maybe they want to avoid cap gains taxes so a small down would work.

I've worked with a few who will do $500k minimums It's a lot more headache and admin cost.Sometimes it makes sense to pay capital gains and just invest passively as an LP.Attached is a spreadsheet I created a for a fourplex that I want to sell.