I would suggest go see a lawyer and setting up PPM - Private Placement Memorandum to avoid complication later on down the road.

As you can see, this is complicated.

The smaller deals tend to be a little less complicated.

I don't plan on telling them, it would only complicate matters.Comments welcome.

If you spend a dollar on any unnecessary expense and save $0.28 or $0.33 or even $0.99 (though we don't have any tax rate that high) you still are worse off than if you had kept the dollar and paid taxes.You should ALWAYS take the depreciation deduction. 

This feels complicated, but I'll do my best to make sense here:Rather than flipping, there is a property I am interested in purchasing for myself to live in.This property is an REO.The dwelling is in bad shape and in need of (potentially) considerable rehab.

I think you're asking a simple question in a complicated way.  

I'll never understand why people insist on making this business SO much more complicated than it should be...1.

Just renting it out on a standard month-to-month lease gives me the most flexibility and is the least complicated.

No double taxation.You will have to file fairly complicated returns in CO, IN, and MI as well as federal.