The main difference is liability protection, not tax treatment.

You're just housing people, not doing treatment or using staff on site, so that's why I say just a landlord policy for the house.

We specialize in several niche areas including:-Sober living facilities-Residential treatment facilities-Halfway housesWe work with many different clients in this space including Oxford House.

Many millionaires keep rolling deals forward to defer taxes indefinitely.Capital Gains Treatment – When sales do happen, long-term gains are taxed at lower rates (0–20%), and depreciation recapture is 25%—still less than top ordinary income rates.Add these together, and you can see how someone with millions in real estate activity may show very little taxable income even though they’re cash-flowing like crazy.Caveat: This doesn’t mean it’s easy or risk-free.

Plus, the ability to buy notes at a discount can boost overall ROI if structured well.The other piece that often gets overlooked is tax treatment.

I want to ensure this is done in a way that complies with California law, avoids triggering partnership tax treatment, and doesn’t lead the IRS or courts to recharacterize the arrangement as equity.

I’d look closely at:How the lease is drafted (to protect you if circumstances change).Making sure the financing structure covers the balloon while still leaving you positive cash flow.The tax side—depending on how it’s set up, you could end up with very different treatment on income and eventual resale.I’ve seen setups like this work well, but the details really matter.

@Austin Deardorff, TIC products, syndicated by broker/dealers under SEC law do qualify for tax deferred treatment under a 1031 exchange.  

We have discussed our operating agreement with an attorney who has been somewhat vague on what we should be deciding amongst ourselves on topics like treatment of partner’s capital (as loans or equity share on a specific deal) , voting structures, and the other things we need to decide to set the guard rails of how our business will operate.

I cannot, in good conscience, support a mentorship program that fails to prioritize the well-being and fair treatment of its employees.