So your savings here is related to that percentage of savings divided into your personal tax rate.Which has to be compared to the same increase (by not having the expenses in the LLC) times the LLC tax rate.Some will argue that these figures are a virtual washout, but without them actually being computed (or at least estimated) by the one who knows them best (you and or your CPA) you will never know the answer here.I have done this AFTER the fact for people to show them which way would have been best and have seen the answer to be both ways depending upon the situation and the savings is usually a very good amount compared to the other way.

Divide your Annual NOI by the CAP rate and you'll get a good idea of the appraisal value.

The part that is left I planned to divide into smaller lots.The funds for the purchase came, in part, from a private loan.

I think Bill Exeter really meant to say that the percent of profit due to appreciation that becomes taxable is the number of years you used the property as a rental (since Jan 1, 2009) divided by the number of years you owned the property.

Mostly quaint shops, medical and office buildings down "main street".Here's what I know now after a few days of phone calls and research....Only 8 units (the 9th one is gone -- fire, explosion, etc...)Price now $400K (better because one less unit, but still $50k per unit)Only one tenant is salvageable and I don't know the details of the rent yet (all the remaining tenants are being relocated by seller prior to possession -- this one lease is up in April)Property is owned by a non profit and is used for housing for people needing a little help (so no income to speak of)No expenses to speak of (at least for current owner because they are tax exempt and volunteers provide services for repairs when needed)Electric is not divided (don't know total yet but I would spend the money to separate and have tenants pay)Property was built in the 50's and remodeled in the 90s (I still haven't seen the inside of the units, but are housing mostly elderly couples that have been there for at least 10 years -- agent says I will be pleasantly surprised -- walking through on Tuesday with my general contractor friend)Advertised total square footage was pulled from tax records stating about 10,500 sq. ft for living space (so around 1300 per unit...

The most basic thing you can do is dividing it and sell the individual lots to people who want to build their own houses.

Anish,The IRS divides up income into three buckets: ordinary, passive, portfolio.Your W-2 income is considered ordinary.Your rental loss is considered passive loss.Any interest, dividends, or capital gains are considered portfolio. 

My proposed solution is: Create a promissory note so the two remaining parties are making payments to the three sellers for the remaining balance of their percentage of ownership Market Value divided by 5 x 3 (Appraisal TBD). 

@David Jackson can probably nail this for you from the title/estate angle.Usually the father's interest, 1/3 interest will then go to his heirs, if there were 12, 1/3 is divided equally among the 12.As folks pass on, you can have a real title nightmare after those 12 or so get married and divorce or pass on .....just gets messy.

This is the tranche that I believe Jeff Brown was focusing on, as this is the portion of the replacement purchase price that cannot be depreciated.Excess basis = Replacement purchase price - Deferred gain - Exchanged basis = (I am not including closing costs and any future improvements in the purchase price)230,000 - 38,799 - 76,141 = 115,060 The excess basis needs to be divided between land and improvements, and I'll use the same 80% factor as above.115,060 * 80% = 92,04892,048 / 27.5 years depreciation = 3,347 annuallyThe summary of my depreciation tranches (as I'm calling them) is3,015 Exchanged depreciation0 Deferred gain depreciation3,347 Excess depreciation6,362 Total depreciation (for 12 more years, then it will go down by about $100, then the exchanged depreciation will drop off after an additional 12.5 years) Comparison of depreciations:6,691 without exchange6,362 with exchange   329 annual difference in depreciation amounts At the 39.6% tax rate (which is not my tax rate), the $329 difference in depreciation is worth $130 a year in taxes saved (deferred, technically, due to the depreciation recapture).