Therefore, it can not be "written off"; rather, it will affect the adjusted basis that you carry in the property, which will come into play when you sell.

The folks who refuse to adjust are the ones who go nowhere.

Taxes need to be adjusted to the new purchase price.

So start with a cost analysis.Your gain is defined by the difference between your net sale and your adjusted cost basis (what you paid for the property minus depreciation you took plus capital improvements). 

I say you have a conversation with the builder or Agent first to see if they are willing to do a price adjust ASAP.

If you have a W2 and you can adjust your fed withholding, maybe it's another possibility to help you make your ends meet in the short term.Good luck.

The only issue will be if YOU can adjust your expectations to accommodate the expected issues with living UNDER your tenants such as tenants (walking at odd hours,friends over,parking,trash,different work hours,infants,use of common areas such as yard)The best thing you can invest in is soundproofing and carpet padding upstairs.

The rest of the market will take 3 to 4 months to adjust to any major price swings. 

You might need to adjust the split to account for that.Most full-time builders will prefer option number one, where they get paid steadily throughout the process and then go merrily on their way at the end, leaving you to dispose of the properties as you see fit.

I’m a buy and hold investor and don’t like the idea of being forced to account for rate adjustments after 7 years.