Far too often, investors pay for tax segregation studies without understanding the implications of depreciation recapture, purchase properties based on unverified assumptions shared by their realtor, accept the loan terms without proposing alternative loan structures that offer the lender equally safe collateral, form entities without understanding their purpose, secure the incorrect or unnecessary insurance, or spend unnecessarily on improvements and inefficient construction practices. 

You’ll still need to pay tax on depreciation recapture from the period it was rented.If you sell after March 2026, you’d lose the exclusion and the entire gain would generally be taxable.Oregon doesn’t impose an extra “penalty,” but it does follow federal rules pretty closely—so you’d owe state income tax on any taxable gain that isn’t excluded federally.In short: sell before March 2026 to qualify for the exclusion, and plan for some tax on the depreciation you took while it was a rental.Perfect advice, right on the money! 

Or is this really an unnecessary cost? 

The waiting period between the RFTA submission and inspection approval can definitely test your patience, but following these steps helps avoid a lot of unnecessary headaches.I’d also add that keeping open communication with the housing caseworker can make a big difference.

I want to set things up correctly from both a liability protection and tax-efficiency standpoint but I’m not sure what the smartest approach is.I want to make sure I’m protected personally, while not overcomplicating things or eating up profits with unnecessary entity costs.If anyone has been through a similar situation—owning properties in more than one state—and can share what structure worked well (or what to avoid), I’d really appreciate the insights.Thanks in advance!

@Chaim MalIn my personal opinion, you were sold snake oil and you want to buy even more of it (trusts).Cut your losses by dissolving (or at least ignoring) these unnecessary structures and close on your property under your personal name.

It has cost many people including myself a lot of unnecessary money and still is because you deal with the tax portion of opening unnecessary LLCs recommended by supposed professionals. 

So will the jurisdiction impose the HOA when the developer submits the plans to the municipality, and can that be negotiated in or out of the development??

Even if they do allow rentals, some later will attempt to impose restrictions and that is never a fun situation to be in.Just some things to think about.

Using the word “mold” too soon can create unnecessary alarm and potential liability if the stain turns out to be mildew or another harmless substance.Once confirmed, landlords should hire a licensed mold remediation specialist to properly clean and document the repair.