You could buy, rehab and then hold and they would qualify for 1031 Exchange treatment, but not if you buy and hold for sale.  

It also does not necessarily qualify for long-term capital gain treatment even after 12 months.

Steve, what are your opinions of depreciating certain identifiable components as personal property, such as the water heater, other appliances, window treatment, etc.?

The stern ladies at the recording office never show me any love and make me do everything according to the book so I doubt I'm getting special treatment.

T & I is $317, HOA is $339, so monthly cash flow is (-64) plus a couple hundred bucks a year if the toilet clogs or something.I feel like I'm letting the favorable tax treatment at sale and the low mortgage rate guide my decision to keep the property, since negative cash flow is never ideal for a rental - but I also love how low maintenance it is, and I can also see myself moving back into the unit one day if I ever get divorced or if my husband pre-deceases me.    

The IRS provides favorable tax treatment on the sale of real estate, which treats capital losses as ordinary losses, allowing the taxpayer to deduct the entire loss from ordinary income (see IRC Sec. 1231).

Had anyone left, I would've done the full rehab treatment and looked for about $1000 per new tenant.Obviously these are low-income tenants, and I know a lot of BP scoffs at that, but it works.

January was a CPA going over tax treatment for investors and possible tax law changes.

Property purchased primarily for resale (a flip) is not eligible 1031 treatment.  

He strongly recommends that we get water treatment system, septic, and termite inspections.