For example, you could create a weighted structure where a percentage of profits is based on cash contributions, and another portion compensates for rehab or management efforts.Rent Payments and Tax-Free Profits:If you structure it as an owner-occupied property, the rent you pay could be shared proportionally, but tax-free gains on resale may only apply to your share, as you’d be the owner-occupant.

We have sold (tax free), kept as long term and/or short term rentals as well.

How is it for preparing taxes? 

Hi Jon from Boyertown, PA-You and your fiancé are interested in buying your first short-term rental and wonder profitable areas to purchase with a budget up to $500,000.I would look at places along the west coast of Michigan, Grand Rapids, Kalamazoo, and near Ann Arbor, MI.It is important to understand the local STR regulations in each community and partner with a property management company that can help your navigate that and manage it well for an excellent guest experience.Don't forget to look into bonus depreciation and doing a cost segregation study to increase the tax benefits of ownership and if you "materially participate" in the management of the property per IRS guidelines it can offset active W-2 income which most real estate cannot.To Your Success!

However, before you do so you should ensure that your revenue from rental income covers ALL your property expenses in the townhome, including mortgage, taxes, insurance, maintenance/repairs, vacancy, property management, etc...

Overall, the tax benefits and appreciation alone keep me interested in staying with it more than the cash flow itself. 

Hi Everyone,I  am a professional wholesaler and property locator, I locate property on/off market, do a full due diligence on title, encumbrances, taxes ect...

so I used 1.5% as a property tax number, and I used $200 mo for insurance.

So, in your considerations, I would park right there for a bit and determine how this would look for you.Since you have about 2.5 years to think about it before you would need to spring into action to take advantage of the rollover for tax advantages, maybe you try on a rental and see how it fits. 

You also don't have to pay state tax on income.