Sales price of $125k.Y1: $40k downpayment is taxed as 1231 recaptureY2: Interest IncomeY3: Interest IncomeY4: Interest IncomeY5: Balloon Payment of $85k = $10k section 1231 recap, $25k basis recovery ($75k orig basis reduced $50k by Accum.

One way to reduce self employment tax on flips is to use an S-corp or an LLC taxed as an s-corp.

Your deduction amounts to a % of the interest paid and your income should always be ahead of that so all you really do is reduce you actual interest expense, but if you reinvest the money it will add to your income derived from that investment on an after tax basis foryour cost of money.

You have to ask yourself if it's worth it,financially.Probate is not cheap and your share of the proceeds will be sharply reduced with all the attorney and court fees.Plus,the original lawyer will want money for defending the estate from the lawsuit (whatever the reason for the suit).It could take a year or two to fight the sister and in the end,the lawyers will eat up the money from the estate over time.Unless the house is worth at least $200,000 or more as is without major repairs and upgrades needed,I would seriously question whether fighting the druggie Aunt is worth 2 years of litigation and court appearances.It is just my opinion as someone who has suffered through probate,don't take it for the gospel.

All properties are owned in my name and husbands name but have an umbrella policy to reduce risk-no LLC.........thoughts?

The intention would be to perform title search prior to attending the auction to reduce liability.

Reducing your living costs will help you increase your investment capital.

That would reduce the market for the properties since fewer investors can get loans.

If we buy the Property now, do we need to contingently reduced the price for next one year rent discount.? 

The grass isn't trimmed back from the curb/sidewalk, shrubs overgrown, sometimes grass a foot high.Then when it snows you want your tenant to shovel and salt to reduce your liability?