In addition, when you sell, the proceeds could be considered ordinary income and taxed at a higher rate than what you might pay for the sale of a commercial property that has been held for a long time and brings in a long-term gain.
If you’re buying a residential property that doesn’t generate income, it’s rare today that a lender would offer you a non-recourse loan. In most cases, you can expect to have to personally guarantee the debt. This could add pressure as you fix it up and then sell to pay back the loan. In addition, when you sell, the proceeds could be considered ordinary income and taxed at a higher rate than what you might pay for the sale of a commercial property that has been held for a long time and brings in a long-term gain.