In Maryland it is one of the things they target in audits of our records and it results in a $10,000 fine if you did one without it veing disclosed (and agreed to in our listing agreements)Interestingly enough, most agents, including many big time veterans, have no clue what a variable rate commission is until they get fined for doing it and not disclosing it.

Worked in Real Estate audit for a Mid Size firm, but now have my own boutique tax and accounting practice as well as a job in finance company.

You and your agent should set the expectations upfront that the contractor needs to provide a video walk around along with a report from “audit trail” (It is a $10 app on the IOS store) at the end of each week.

J Scott,Couple items in this thread that I will hit upon. 1st, aged entities is a red flag for an audit and trouble down the road.

Heck, my CPA and I regularly discuss and are forced to make our own assumptions on how the IRS may interpret something in our real estate taxes, if we were to get audited.

Only upside is audit risks on partnerships are much lower- because there's so much more info you give the IRS up front. 

Prior to that we had several recommended by our attorney's at the time & that was another disaster, an audit & 2 years of extensions because they couldn't get a handle on our REI & Corporations etc.

Also, you'll probably be audited eventually.

And those bank statements tell a story that would trigger an IRS audit if the IRS saw it, not because they're broke, but because they're good earners, but comingling biz and personal finances, presumably to write everything off and look broke to the IRS.From CoreLogic -- "The non-QM share of total mortgage counts declined during the pandemic and reached its lowest level in 2020, at 2% of the market.

Under audit the IRS takes the position that the property is placed in service when it is first being rented, not when you list it for rent.From a practical standpoint you will find yourself pissing into the wind by trying to argue it was placed in service before you completed all of your repairs/improvements.