I believe most leases state they don't terminate on death of either party, but I've always interpreted that for circumstances like where I die and tenant can stay and pay rent through lease end, not be forced to move because my heirs want to sell; or a tenant dies and their dependents can stay through the end of lease if they can pay the rent so not to throw their lives in even more turmoil at such a difficult time.  

I don't speak legalease either but my interpretation of events is that the HOA foreclosed first and an auction purchase was made by an LLC. 

One that your CPA or tax attorney should probably answer as the rules seem subject to interpretation. 

It can feel a bit scary when all of this legal jargon is being through out and there is so much room for interpretation,  we often often time side with @Greg H. on play they safe side but then that leads to the " Death by a thousand cut"  so I appreciate all of the good conversation and thoughts on this. 

If you buy a property for $150K less than you sell then the irs interprets that as a taking of profit first. 

Worst of all, they won't provide any assistance in interpreting the data.  

Even though the mantra generally seems to be "pick an area and make it work," especially in the twin cities area where the market seems to be favorable, I always strive to make a fact-based decision; even if that "fact-based" is subject to biased-interpretation, it still gives me a warm and fuzzy.

@Karla Parraga,As I interpret your strategy, you are planning to use your new property as a second home for the first six months of ownership, then convert it to a full time rental. 

I'm afraid you did not understand what @Basit Siddiqi explained, and possibly were confused by what @Ashish Acharya added, which could have been (mis)interpreted as a green light to deduct.A business cannot start deducting anything - not start-up costs and not anything else - until it has legally started for tax purposes.

I got the covenants from a realtor and while there is no specific mention of STVRs, there is a general "nuisance" clause which could be interpreted broadly if there was a problem.Anyone familiar with this area or otherwise dealt with HOAs in nicer/luxury neighborhoods in other markets?