You'd need to show the income on your tax returns and/or have a lease and first month's rent/security deposit for the unit you were living in.

Let's assume your expenses (mortgage, taxes, insurance, maintenance, vacancy, etc.) comes to a clean $600 and the property rents for $1,000.

If you think ahead, you can minimize recapture with the right tax planning.So what is recapture?

This might make sense, but again, you are just deferring the taxes and now pushing tax from capital gains to ordinary income. 

The sellers you are dealing with in these situations don't deal with prorating Taxes, or any other kind of prorations, that is what an escrow agent does. 

Assuming this is an 8 cap neighborhood you'd have a ~$420-450k value within a year (unless property taxes are crazy high) when leases would renew since it'd be valued as a commercial building with the office space.

Be sure to hold a hefty reserve to handle on-going maintenance, capex, taxes, and insurance.

Many experienced investors are humming a long similar to prior to the rate hikes.  

Instead of jumping into an expensive Long Island market with negative cash flow, consider investing in a Texas market like San Antonio, Houston, or DFW suburbs—these areas offer strong rental demand, lower property taxes than NY, and better cash flow potential.

I did work for a commercial real estate investor prior to jumping into syndication, so that gave me a strong knowledge base to start with.