The duplex I purchased has taxes of ~3K and they are now ~6500, that's because they were capped at the lower assessment from the prior owner until sale.Due to prop 13 you cannot use existing property tax as a basis for the property tax on a new purchase. 

My friends who are consultants use this to squeeze as much into their 401K pre tax as possible.  

We created a C corporation which then taxes investors as qualified dividends which is a much lower rate BUT we are eating that 20% tax as the corporation.As a sidenote for people reading this, this is always why it is so important to undersand the tax consequences as if I gave someone 10% and its taxed as a qualified dividend and they are in the top bracket, they would net more at 10% as a dividend than 12.75% with a K-1 and ordinary income...

You will pay the tax but because it is an owner carry note you will only pay the tax as the payments come in (that tax year). 

It seems like a great way to get started finding a property is to locate places with both zero to low property tax as well as picking a state with zero to low income tax! 

Yes, someday I’ll have to pay ordinary income tax as I take distribution's but who cares if it’s all rental income and or appreciation (with no capital gains).

I grew up in Florida where they do not have state income tax as well. out of the 7 states that do not have a state income tax. texas is the highest. 

If I would do that with you, I would likely have you do my Federal tax as well and keep it all in one house.

The main point to get from this for your perspective is that there is a balance to sitting tight (you build equity but never tap the deferred tax as leverage) and being so volatile that the hidden costs creep up on you.  

With the Wyoming recommendation, I thought you were going in the direction of that state having no corporate or personal income tax. A