What I was trying to say was, excluding the Negative Equity of that property/transaction, the simple test is if your net worth is negative the tax would be avoided.

So part of me says this enthusiasm is with low $... just testing the waters.

Has anyone put together one of these:[img]http://media.merchantcircle.com/19717988/billboard%20trailer_full.jpeg[/img]I'd love to test out the response they generate

I determined that the owner was not a real seller and was just testing the waters.

Also, refied 2 years ago...that cost me $2k in refi costs rolled into the loan...so now further underwater.Oh, I pickup garbage, liquor bottles, etc at this place all the time.

Cash flow = (rent * 0.5) - P&I (if using a PM)Cash flow = (rent * 0.65) - P&I (if self managing)Cash on cash return = Annual cash flow / total cash investedIf you like those numbers, it passes test #1For #2, you just ask what you could sell the house for if you needed to sell.

There are "tests" as to the intent of an option and one carefully drafted can avoid it being seen as a sale at the time the option is made. 

Do you think this would still pass the sniff test? 

People figure it can't hurt to test high pricing in a hot market--they might win the lottery.I just contracted a 2100SF home on a corner 10KSF lot for $270K.

But you didn’t come around to noting that there are field-tested solutions to every issue you raised.