Tax Deductions Prior to Purchase of Real Estate

[Tyler Standish]

Hi,

I am wondering if I can deduct "business" expenses prior to purchasing any real estate? I eventually plan on purchasing an REO property and flipping (and will likely set up an S-Corp), but I might not even make my first purchase until 2017, as I am saving for a down payment. Can I still deduct expenses I incurred in 2016? For example, I have purchased books, office supplies, driven to possible properties (mileage). Would this be considered a business expense or capital loss, or neither for 2016? I am thinking maybe I should just set up the LLC/S-Corp now and if I don't make a profit this year (which I won't), I can at least deduct all my expenses (and wouldn't give myself a salary this year since I wouldn't be making any money). However, since I am trying to save for a down payment, I don't want to incur a lot of large expenses (not sure how much it would cost to set up the LLC). Also, in order to receive the benefits of the LLC/S-Corp. status, do I have to set that up before I make the first real estate purchase or can I do it while I am rehabbing?

Sorry, there ended up being more questions in there than I had planned :)

Thanks!