Anything else results in "boot" for which you do not income taxes.This is probably an issue of semantics but your basis would be what you paid for the place adjusted up or down based on capital improvements and depreciation.

I am in the process of setting my capital improvement budgets for the year and I need some suggestions.

I want to skip right over the 3-4 unit buildings as they are classed as residential investments and right into the commercial.Every effort you make to improve the building, each expense you lower, every rent you increase, is a direct increase in NOI and a straight up increase in the value of the property.

Not included are repairs, capital reserves/improvements, vacancy, any owner paid utilities, and management.

@Sean KuhnIf you put 12K of initial capital improvements into the property at purchase then I would include that amount in your initial capital cost (purchase + cost to put in service) and use that amount when calculating CAP, CoC, or any other measure of return.

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As to your son's business model, from what I gather, he purchases distressed properties (probably physically distressed, rather than financially), improves the properties, rents them, then sells them to investors and holds the note?

I'm a contractor, so I have a general sense of the costs for a rehab, but will be extremely vigilant when moving through the improvements.

Having a property in a trust has no effect on the impact on determinations or planned outcome of an area.Economic stimulus is generally offered or provided, funds to lower costs of improving properties in line with planned development.

I have outlined a couple belowThe more I get into this the more numbers I have to dig up and project going forward.Background Information· Purchased 2003: 250,000 (no down payment)· Refi 2006 timeframe (money out for improvements)· Refi 2009 (to avoid drastic increase in payment and rolled in prepayment penalties) I signed the papers so I have to live with itUnless it is absolutely necessary I would rather not discuss the above mistakes in great detail.