Generally, I use 1% of the purchase price for EMD and I aim for a 30-day due diligence period before the EMD is nonrefundable. 

@Zoie Holley - I think in most instances it’s either lack of funds (savings when starting out) or an inability to take effective action after you’ve educated yourself over a period of time.

Add an additional 50% amount of time to your renovation period.

Otherwise what’s the point of losses being suspended if they can’t be used to offset the profits upon sale/exit.In your original example, assuming $50k of depreciation taken over 5 year hold period and $20k of suspended losses at exit, your adjusted basis will be $50k and hence the total gains will be $150k ($200k - $50k).

It is income and asset based, but there is also a look-back period.

I have them sign a Purchase of Sale Agreement stating that I have x days for a due diligent period to both do an inspection (if I choose to do that) and find a buyer.

I am in my due diligence period now.

The non conforming language usually is that if the property goes vacant for more than a certain period of time or burns down then it can't be rebuilt with the grandfathered zoning.

Despite asking for only a two day inspection period due to only seeing the house on video before making the offer , The sellers counter was zero inspection, which I accepted.  

Also of importance is that the seller passed on the security deposits of current tenants to me at closing.I know that in Florida once a contract is executed any damages that occur to the property before closing are the responsibility of the buyer and this is why we buy insurance during this period.