I see liability and I see something that could cause confusion and a drain on your time and energy an occasional perhaps bad review and a time-waster and having to track sales and possibly tax a lot of other nits.

I have several flipping clients in the Indianapolis and Fort Wayne areas, where I utilize the same strategy for helping them control dealer tax as well as paying tax in situations where there is a zero cash increase for the year.

Unlike passive rental income, the income from an active trade or business is subject to self employment tax (a nasty 15% tax commonly referred to a "social security and medicare" by working folks).

Though it’s minor if one was only buying one house I would not buy in a state with state income tax as it’s just one more administrative thing to do each year.

Section 1250 recapture = additional dep on top of  SL depreciation tax as ordinary income.Unrecaptured section 1250 depreciation  = SL depreciation on property taxed at 25

If it goes further you've got to decide to weigh the cost of defense and the potential tax. 

However most businesses (even the self employed) like to pay as little tax as possible so this means showing little income. 

Obviously, we want to minimize the Capital Gains tax as much as possible, but since we don't plan on selling the land, maybe it won't actually apply to our situation.

There are tax advantages to having an S-corp due to the dividends and disadvantages due to self employ tax.

It actually helps  a lot in terms of capital gain tax as well.