Your father-in-law will want to minimize his tax liability on the capital gain and think about how the sale fits into his estate planning strategy.

Imagine making millions of dollars over the course of your career and then having to pay 30-50% every year to uncle sam instead of compounding that cash over time.This is exactly what real estate professionals have learned to mitigate.To reduce their taxable income, they just buy a building every year, do a cost seg, and use depreciation to reduce their tax liability dramatically.Their personal wealth snowball grows much larger and much faster than their W2 counterparts who give most of their money back to the government each year.Following this strategy as a real estate professional is one of best ways to end up with a much larger net worth at the end of your career.

Make no mistake it isn’t quick or especially comfortable but it can definitely be profitable.As for the rent a room thing in most locales I have to wonder if the additional rent is worth the hassles of dealing with the increased time and liability of multiple tenants in one property but that’s a totally different conversation. 

If your IRA receives an equity portion of profits from the business, it will likely have tax liability via UBIT that would be detrimental.Owning income producing real estate or interest from lending are passive activities not subject to UBIT. 

You fill out an application, provide proof of income, credit report, list assets, list liabilities, and so on.  

My wife and I have business income and our accountant can divide the income according to what would be the best for reducing tax liability.  

Consider whether an LLC is right for you—it can provide liability protection but isn’t essential for a single property, as personal liability insurance and an umbrella policy may suffice.

Legal Entity Considerations: Should I hold my rental properties in an LLC or trust for liability and tax benefits, or does it not make a difference for me?

You would need car and renters insurance with a minimum amount of liability coverage in order to qualify.4.

The best pools are where somebody else does the maintenamce and has the liability.