I am not privy to their financial situation.

And for example if they see a property was taken back by the bank and is not shown on the track record as a huge loss, then that is another type of red flag.Internet searches can also be done on the sponsor looking for lawsuits, etc.

The resulting first-year tax benefit was approximately $8,200 due to passive loss suspension rules.

The resulting first-year tax benefit was approximately $8,200 due to passive loss suspension rules.

A 1033 exchange is specifically for involuntary conversions and catastrophic loss situations like yours. 

@Javier Contreras save yourself a bunch of headaches and potential losses and connect with @Samuel Eddinger!

Lenders typically look at your full tax return (Form 1040) with Schedule C (for self-employment income) or Schedule E (for rental income) to verify income.To qualify for a home loan, banks generally require:At least two years of reported self-employment income.Tax returns, bank statements, and possibly profit & loss statements.A solid debt-to-income (DTI) ratio to ensure you can handle mortgage payments.If you’re newly self-employed and don’t have two years of tax returns, you may need to look into bank statement loans, which some lenders offer based on income deposits instead of tax returns.

They can keep those loans off your credit reports, allowing you to maintain financial flexibility and freedom.

Then I find out a week ago they sold the property at a loss, ALL my capital is gone, and Ken McElroy goes on his merry way making youtube videos about how much money he is making. 

Real estate prices have softened and would create a loss of ~40K if we sold.