If your income is too high to take the net rental loss as a passive loss allowance, you accrue the loss and carry it forward each year until you can use it.

A page that illustrates what the transaction is all about.PAR Value, the remaing principal and accrued interest together with any other outstanding amounts due; the amount shown on the day of the transaction.Settlement Statement of Note PurchaseSettlement Date May 24, 2013Subject Note: That certain promissory note made on the 12th day of June, 2009, in the original principal amount of $25,000.00 bearing interest at ten per cent per annum with monthly payments required in the amount of $330.38 with payments beginning on the 1st day of July, 2009, payable to Joseph Nogood as the holder, secured by property described as 1992 Moneypit Mobile Home, Serial Bumber 19925495-032 secured by Missouri title.PAR VALUE $20,215.63DISCOUNT 20% 4,043.13Purchase 16,172.50The undersigned acknowledge that this statement reflects the true amounts indicated and the basis for the agreements made by and between the undersigned in connection with the note purchase transaction described, the date first appearing above.Thus Agreed:_____________________ ______________________ Joseph Nogood Sam AllsmilesI just cranked this out as an example, for some kind of settlement statement or accounting of what you're doing.

Damages may certainly be awarded, look to the costs that may be charged in a foreclosure, accrued interest to the date of notice and at that point it will likely go to a non-accrual, costs involved to protect the property, insurance, any bonds necessary, collection expenses and attorney fees are all costs usually applied.

Just be on the lookout for all the city code fines that have accrued still being attached to the property.

think about a ground up construction deal, for a while in place income is zero while interest accrues.  

If there is not enough cash flow from a project to deliver the preferred return for a given period that amount accrues and must be paid before paying the current preferred return or next hurdle in the waterfall.

After X amount of time, you have accrued a downpayment and can then purchase the property from the seller along with financing from them, or a bank. 

With a "75k" profit there could be tons of stuff which go wrong plus any interest which may accrue on this money.

Edit: That's assuming your hard money lender will allow the interest to accrue and be paid out at the end.

This was right at the beginning of the pandemic too, so the fun part was that the liens were accruing interest, but the whole court system was closed due to the pandemic.