However, the tax treatment of these LLCs can impact the separation of assets and liability protection.

Thanks for writing Ben.When you are "house hacking," which typically involves living in one of the units of a property you own and renting out the others, the tax treatment of depreciation can be a bit nuanced.

This could include income statements, bank statements, or any other relevant financial documents.Communication Records: Maintain a record of all correspondence with the borrower regarding the loan modification, including emails, letters, or notes from phone calls.Independent Valuation: If there's a reduction in the principal balance, it might be necessary to obtain an independent appraisal or valuation to determine the fair market value of the loan after modification.Professional Advice: Consult with a tax professional or accountant to ensure that the loan modification complies with tax regulations and to document their advice.Internal Records: Keep internal records that show the accounting treatment of the modification, including any write-offs.Documentation is crucial to substantiate any losses for tax purposes, so it's advisable to work with a tax professional or accountant to ensure compliance with tax regulations and to maintain accurate and complete records. 

The tax treatment would depend on the percentage of time and space used for each purpose.1031 Exchange: If you are considering selling any of your current investment properties to fund this purchase, a 1031 exchange might be a strategy to defer capital gains taxes.Tax Credits: Investigate if there are any local or federal tax credits or incentives for certain types of property use, such as energy-efficient improvements.In any case, documenting your personal use and rental use meticulously is crucial for tax purposes.

The gains from the sale are essentially rolled over into the new property.If you decide not to do a 1031 exchange and instead recognize the capital gains from the sale of your investment property, you can generally use any capital losses from your stock market transactions to offset those gains.The fact that your wife is a real estate professional may have implications for the treatment of passive losses and gains.

Real Estate Professional (REP) status primarily affects the treatment of real estate activities for tax purposes.

The depreciation deduction can significantly offset rental income, providing investors with a valuable tax shield.Capital Gains Tax Benefits:When real estate appreciates and is sold for a profit, investors can benefit from favorable capital gains tax treatment.

However, the specific tax treatment can depend on the accounting method you use for your business.There are two common accounting methods for small businesses:Cash Basis:Expenses are deducted in the year they are paid.If you are on a cash basis, you can generally deduct the expenses for the heating and air system in the year you made the payment, even if the property is not yet in service.Accrual Basis:Expenses are deducted in the year they are incurred, regardless of when they are paid.If you are on an accrual basis, you may be able to deduct the expenses in the year they were incurred, even if not paid.In either case, it's important to keep detailed records of your expenses, including receipts and invoices, to support your deductions.Please note that tax laws can be complex and subject to change, and the information provided here is for general guidance.

Here's how you can calculate it:Total Tax Benefit from Cost Segregation: Let's say the total tax benefit from the cost segregation study for the entire property is $2 million.Total Capital Raise: If the total capital raise for the project is $6 million, this represents the total capital contributed by all investors, including limited partners (LPs) like yourself.Your Investment Amount: You mentioned that you invested $100,000 as an LP.Now, to calculate your portion of the tax benefit, you can use the following formula:Your Tax Benefit = (Your Investment Amount / Total Capital Raise) * Total Tax BenefitUsing the numbers you provided:Your Tax Benefit = ($100,000 / $6,000,000) * $2,000,000 = $33,333.33So, based on your investment of $100,000, you would be entitled to approximately $33,333.33 of the total $2 million tax benefit from the cost segregation study, assuming you have sufficient passive income to claim the passive loss.Please note that the tax treatment of these benefits can vary depending on your individual tax situation and the specific tax laws in your jurisdiction.

This is the default tax treatment for foreign investors.Ownership Through a U.S.