So, he's not involved in the foreclosure at all.  

It is illegal, doing so involves civil penalties.

It sounds like a PITA to have a unique checking account and file taxes separatly per property.

The elderly woman is now in assisted living, so two properties are involved.

Even if you do not address the item immediately, at least you know what you are facing and any expenses involved. 

Just create and LLC and elect S Corp status with the IRS for tax filing.

@Victor Mondragon yeah, unfortunately there is always some type of costs involved. 

Let me start by saying I’m not a cpa so this isn’t tax advice, go consult a cpa.From my understanding if your AGI is above 100k they start phasing out how many losses you can take (capped at 25k if you make under 100k), once you hit 150k then you can’t take any losses.The only way (I’ve seen) around this (assuming you’re married and you file jointly) is to have one of you be a “real estate professional” which means you spend 750 hours a year working actively on real estate and that you don’t spend more time than that on any other job.If you meet that criteria you can take unlimited losses and use that to offset other income, so in theory you could make say 300k and show losses of 350k and pay zero income tax.

Hi BP members,I am a newbie from Baltimore, MD and am very interested in getting involved in Real estate.

Besides that, another issue is the time frame involved.