Do not rely on it as legal advice.

Do not rely on it as legal advice.

The safe harbor applies to amounts paid during the tax year to acquire or produce what the regs call a “unit of property” (UOP), you must meet these requirements: (1) at the beginning of the tax year, the taxpayer has written accounting procedures treating as an expense for non-tax purposes amounts paid for property costing less than a specified dollar amount (which will be 2500 for you), or with an economic useful life of 12 months or less;.(2) the taxpayer treats the amount paid for the property as an expense on its books and records in accordance with its accounting procedures. ( do this on your bookkeeping software or whatever you utilize)(3) the amount paid for the UOP doesn't exceed $2,500. as substantiated by invoice.Note: The cost for the Unit of Property includes additional costs (for example, delivery fees, installation services, or similar costs) if these additional costs are included on the same invoice with the tangible property.Eg:A purchases 100 printers at $500 each for a total cost of $500,000 as indicated by the invoice.

Hello all, I currently own 3 townhomes on a street with a total of 12 townhomes.

I have a 5 unit that would be more than double that but you would be relying on others to look out for your interests.

So $2100 total.

Will I essentially be taxed on the sale of Property #1 ($375k - $280k  totaling $95k profit) regardless of the $56k (showing as equity in Property #1) being from another loan? 

I'm not interested in buying a total clunker that would require a complete gut job, and I intend to purchase the property in cash with no lender.

They assured me it totally legal.

If I want to generate $100,000 of passive income, at $200 each thats 500 units, which could mean a total mortgage of $25 Million.