Can I deduct $1200 expense for a property I did not buy?

[John Pak]

I incurred about $1200 in expenses in trying to buy an investment property. After many inspections, professional opinions, and negotiations, I backed out because the price was too high vs. estimated renovation costs. At the time I incurred the $1200 expense, I owned two other rental properties, so this was not exactly a "start up" cost. I do not have an LLC or any other business entity.

All the reading I have done seems to indicate that this is an expense that cannot be deducted.  I can sort of understand that because I don't have a property that I can expense this against in Schedule E.  Trying for a regular investment expense would not work because of the 2% rule.  

So is there anything I'm missing?  Thank you.  

[Brandon Hall]

@John Pak The only time exploration costs are deductible is if you already have operations in the geographical area in which you incurred these costs. The only time you may capitalize these costs is if you later purchase a property within the same geographical area. 

For instance, if I place a property under contract in Raleigh, NC and later decide to walk after I've incurred expenses, those expenses simply stay on the books until I eventually purchase a property in Raleigh, NC. I cannot subsequently purchase a property in DC and write-off or capitalize my Raleigh, NC exploration costs.