Unless that doctor has a modified AGI of less than $150k (which is unlikely for a doctor, trust me) or has a spouse that's a real estate professional, there's no way he can use regular real estate losses to reduce his taxes...If his return is selected for examination he'll be hit with back taxes, interest, and penalties.

@April BirdsongAs mentioned, material participation of $25k allowable deduction phases out between a modified AGI of $100k to $150k.You might be able to deduct some of the upgrades if they were smaller chunks.. maybe?

A hidden expense that is impacted by capital gains is Medicare payments, if you are close to 65 or older consider the below:The monthly amount you pay for Medicare Part B and D is based on your Modified Adjusted Gross Income (MAGI) from 2 years prior.

Once you choose your depreciation schedule, you cannot modify it mid stream, you are on that path until you either sell the property or deplete the depreciation life of that component. 

The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all times during the year) is reduced by 50% of the amount of your modified adjusted gross income that’s more than $100,000 ($50,000 if you’re married filing separately).

In this case, I would modify that to: "How much can you afford to lose as a result of a 'good business' decision?"

The minimum monthly lease payment will be $51,000 modified gross with a goal for the lease to be closer to $54,000 modified gross.

Definitely a good initial eval.Mark, good to know, what are some modified screening criteria for your markets?

It is fairly easy for business owners to modify their plans to allow it.

I then decided to modify my criteria to look for deals that were 50+ units and found that I had much more success in that space because most credible bigger buyers aren't looking at deals that are smaller than 100 units.