What your relative describes would be equivalent to someone who owns a show store paying tax on the gross price of the shoes, rather than on their profits.In addition to deducting any costs for either the purchase or sale transaction, you should be able to deduct a lot of other things, too.

Just because your related to someone that doesn't mean anything in terms of running a business.2.

Bob's your uncle.Depending on your relative income and net worth, you might even be on the incipient edge of gentrification.

Only an educated guess here, @Walter Parker, but it's probably the fact that you don't have stable income, no reserves, and your relatively short credit history.

You will pay the property taxes and insurance directly unless your relative wants to escrow these for you.

Keep living with your relatives, this is an exceptional financial opportunity that you may not have again (or want again) as an adult.

doesn't make sense to spend $22k on a property that will be worth $21k when finished, you take on a lot of risk and work for no financial gain, plus you're probably on the hook for those back taxes, if your relative doesn't pay them with the $2k purchase price.

If you go forward with it, you do need to assemble that team... just make sure you have some very experienced operators that can balance out your relative inexperience. 

If you buy out your relative, you will own a property worth $400,000. 

This is an opportunity for your relative to learn the real estate business fast.