https://www.irs.gov/businesses/cost-segregation-audit-techniques-guide-chapter-1-introduction

If an investor tried to get more than one 203(k) loan and declared that he was going to live in each property covered by a 203(k) loan, he would be committing loan fraud; specifically, occupancy fraud.The 203(k) program is currently closed to investors, but can be used for owner occupants purchasing ONE property consisting of up to four units, also known as a four-plex.An investor, if he doesn't already own a home, can declare that he's going to occupy the property but multi-unit properties are very susceptible to post-closing audits to make sure the mortgagor (borrower) really lives there.

A forensic audit could be in your future should you just "walk".

Originally posted by Jordan Sabo:why would it reduce your chances of getting audited?

Truth was, he stuck us with $3000 in back rent etc. etc.Also, CPA's at the last REI club meeting stated the IRS considers that $10,000 taxable income in the year it's received and are auditing these deals more and more.

Big risk...if the distribution of the tenants is not met, say after an audit it is discovered that there were too few low income persons and too many moderate or over income tenants, the project will be out of compliance.

However, they may help if you are ever audited for expenses you claim relating to owning and operating rental properties, but ONLY IF YOU KEEP EXCELLENT RECORDS and in no case will it help you if you are cheating on your taxes.

Keep a few of those around in case you ever get audited.

Fiddling and fudging around with expenses is sometimes a matter of OPINION in an AUDIT, underreporting of INCOME is CRIME NUMBER ONE at the IRS.Besides, none of us like associating with crooks on this site, LOL. all cash

As an LLC is a tax pass-through entity, you (the owner) will receive the same tax benefits as you would if you deducted these repair/improvement expenses on your personal taxes--but, if you use the LLC, it helps legitimize the LLC, is more defendable in an audit b/c it reflects a real business process instead of tax evasion, and frankly it makes it easier and faster during tax time.How might this help in reality?