Thus far we have demo'd the property, and we are waiting on the architect and engineer report to decide final design.

The full blown engineering report is more likely to succeed in an audit, the historical average has less probability.

Fast forward to tax time, we own another property in our own names that’s split 50/50 and reported in Part 1 of schedule E.

I'll be sure to report back on how things turn out!

Sherelle – thanks ..there are several versions of the 3 % conventional program…there is one that requires income being below county income limits ( see link below ) and there are also programs that do not have the income limitationThe income limit look up is here - https://homeready-eligibility.fanniemae.com/homeready/Pre-approval is open ended with no expiration date ..we can update data in your file as needed ….credit report does need to be rerun every 4 months …Data needs for pre approval is faitly easy and straightforward ..see checklist 2 most recent bank account statements 2017 2018 W2s 2 most recent paystubs 2016 2017 tax returns ( 2018 when available )Copies of driver licenses Completed loan application and signed initial loan forms I have emailed you the same information too .

(I live in SF, CA).I found a property I like, but the inspection report just came back with a lot of items.

They are both moving out of state and have accepted the hit to their credit report.

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Can not use the 2 year capital gains exclusion so the full profit would get reported on schedule D.