To answer your question there is no magic number that will trigger an audit.

I would definitely research that before pulling the trigger on a property. 

 @Shravan Hemchand Prior to pulling the trigger on a Cost Seg study, you should evaluate 2 things:1 - How much net additional deprecation tax deductions a Cost Seg study would provide: Best way to get this is by requesting a free feasibility analysis from a Cost Seg provider.

This incident triggered every trouble I'm experiencing now. 1) The officer from LAHD is after me saying that I need to register the property as a rental property and evict her with relocation assistance, which cost about $9000. 2) The Building department is after me with the order to comply: which I believe it might be better of demolishing the house and rebuild it. 

This is where I see so many people get caught up and are never able to actually pull the trigger on an investment property.  

I'm trying to help you be comfortable with what you buy BEFORE you pull the trigger.

I know his cost basis in the property is likely very very low, so selling would trigger significant capital gains and depreciation recapture. 

We've always been interested in investment properties and have been following BiggerPockets for many years now but never pulled the trigger.

Noooo you triggered the keyword alerts.

I commend you for pulling the trigger based on having just enough experience, and not over analyzing.