We've never even had a tenant try to sue us over a security deposit dispute.For the last 10+ years, I have occasionally asked for just one example of an investor that was sued, lost, and the judgment exceeded their insurance coverage.

When it's sold it will be taxed as capital gains tax and may also have some unrecaptured depreciation which is capped at 25% and  recaptured depreciation as well which can be up to your ordinary income tax rate.

Net investment income tax= 3.8%I was aware of the Long term capital gains tax, but I was surprised to find out about the Depreciation Recapture and the Net investment income tax. 

I've met some very highly specialized experts in low income tax credits, corporate accounting and tax, as well as tax resolution. 

@Nate WilliamsWith one income, two kids, and limited cash flow, minimizing risk is key.

Any tax knowledge of if people doing this strategy are able to take the losses from the cost seg study (on the ADU) to offset their W2 income?

We invest in Greene County, Ohio and currently have 24 low income units. 

Sure, some voucher recipients game the system (years ago, I had a tenant who knew exactly how many hours she could work and how much income she could earn to remain on the program).

For example I have an account for each property and a sub-account just for the security deposits for those properties.

Investment Info:Building a Fix and Flip/Wholesale Active Income Arm of Our Business.Routinely have 5-10 active flips/wholesale deals under management/in process.