I have a property under contract in Memphis, TN, 38111. It’s a 3/2 with over 1600sq. Currently rented for $800. I offered $52k and seller accepted, multiple contracts fell through already, I was told. My realtor gave ...

That is too dependent on the individual to determine.

Protection, i.e. how far fire hydrants and fire halls (whether full time or volunteer) are from the location is important as it will determine response time in the event of a fire.

Yes it seems silly, but that can be the determining factor.

. §1.165-9(b)Property converted from personal use(1) If property purchased or constructed by the taxpayer for use as his personal residence is, prior to its sale, rented or otherwise appropriated to income-producing purposes and is used for such purposes up to the time of its sale, a loss sustained on the sale of the property shall be allowed as a deduction under section 165(a).(2) The loss allowed under this paragraph upon the sale of the property shall be the excess of the adjusted basis prescribed in § 1.1011-1 for determining loss over the amount realized from the sale.

As such you need determine what expenses/costs are related to the investment property and what are related to the personal residence.There are a couple of accountants that frequently contribute to the community.

So multiple obstacles, but I am determined.

However, how do you determine profit margin?

Can I get the improvements re-appraised by a commercial appraiser to determine their fair market value and just use the leftover basis amount to allocate between the house and farmland according to the % used in the original appraisal?

First step....find a local Wxperienced short sale agent.....the bank will require it to be listed for a short time and more importantly someone who Knows what they’re doing needs to put it together, including determining what add’l money a buyer may need to kick in to junior debts Before making an offer.