The pre-2001 rate of 39.6% applies to taxable incomes over $400,000 ($425,000 HOH, $450,000 MFJ, $225,000 MFS).

Example: when the property was purchased the percentage of the improved value to the total taxable value was 60%, but now it is 50%.

If you decide to sell the land at a later date, your taxable long term capital gain will be the difference between your net sale proceeds and your cost basis.

If you sell for $160K and have $13K in selling costs, you would have a taxable gain of about $24K for a tax of about $6,000.Now, if you were generating passive losses from the rental as you did your taxes each year, then those carry forward.

A taxable entity, including a combined group, qualifies to file a No Tax Due Information Report (Form 05-163) if it meets one of the criteria below: has zero Texas receipts,qualifies as a passive entity under TTC 171.0003,is a real estate investment trust (REIT) that meets the qualifications specified in TTC 171.0002(c)(4), orhas total revenue, annualized per 12-month period on which the tax is based, below the no-tax-due threshold amount, which is $1,080,000 for the 2014 and 2015 report years.

While this complicates things somewhat, you are still going to see a higher cash-on-cash return from the use of leverage than an all-cash purchase.Engaging in a trade or business on a regular or repeated basis incurs Unrelated Business Taxable Income (UBTI).  

Based on the specific instance here, if the income of a Chinese investor or business is taxed here in the U.S at say 35%, they are able to apply the tax amount paid in the U.S towards what their tax liability would be in China on the same taxable income.

If I use all my tax write offs and reduce my taxable income to 0 will that reduce my buying power in the future?

Then using the 1031 exchange to take all of the gain from the asset and rolling it into another property and then doing the cash out refinance, which then allows you to take out a chunk of cash without incurring a taxable event.

The LLC is a separate legal entity so a transfer to it will always be taxable.