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My question is: how should I structure things to make my tax liability as low as possible?

I have an earlier question which needs to be answered not to my satisfaction, but to yours. Is rental real estate halfway across the country the best place to invest this money? From the tax angle alone you have MN income tax to pay even though you don't have to pay WA income tax on the profit. The profit is going to be somewhat less than it could be since you'll require professional managment assistance. Add in the occasional vacancy, etc., and I'd strongly urge you to run some numbers rather than automatically assuming you'll keep the properties.

Phil
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