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Hi,

We are trying to buy investment property, but have had several
problems and deals which fell through for one reason or another.
My question: can we write off the trips, appraisals, etc this year,
even if we don't close on a property this year?

Thanks,

--Foobarista
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If you claimed the expenses of looking for a property you intended to buy but did not, it would be a miscellaneous deduction on Schedule A, and subject to the amount that exceeds 2% of your AGI.
Assuming you have investment income of some sort or another that would be more than the deduction, I don't see much difference between deducting the Wall Street Journal which you intend to read every day looking for stocks to buy and sell but usually don't, and considering buying property but deciding, after due consideration, not to go through with a deal.
Of course, if your looking for property means trips to Vail, Lake Tahoe, etc. and you stay in nice hotels for a week each time, but don't buy anything, I suspect the deduction would not stand up to an audit!
Best wishes, Chris
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Of course, if your looking for property means trips to Vail, Lake Tahoe, etc. and you stay in nice hotels for a week each time, but don't buy anything, I suspect the deduction would not stand up to an audit!
Best wishes, Chris


Thanks!

Actually, it was cheap motels and dusty towns in CA's central valley
and desert and one trip to central Texas - not quite garden spots :)

--Foobarista
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It was my understanding that unless you are a "professionsl" real estate investor, deriving your income substantially from purchsing investment property, and managing it, you cannot deduct those expenses you inur researching the property. Essentially, until you buy it and place it up for rental you are not operating it as a business. You can deduct expenses incurred getting the property ready and depreciate additional inprovements, etc.

What I did to help me was to purchase my rental property in an area that I normally travel to for vacation and visits. I have a SFH in La Quinta, @ 15 miles east of Palm Springs, CA. I have traveled there to visti relatives and vacation many times over the last 15+ years, so I know I will be going back.

When I purchased the property, I could not deduct my travel expenses to go there, find the house and purchase it. But,, now that I own it and I can reasonably be expected to manage it by visiting a minimum of 1 time annually I can deduct my travel expenses, among other things.

So, like I said, unless you are a professional investor, I doubt if you can deduct those expenses.

cat
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