Note Investor Taxes / CPA - Non-performing specifically..

[Daniel E.]

I imagine there are some very specific tax strategies for non-performing note investors. 

For example, if you purchase a $500k legal balance (unpaid principal + accrued interest/fees) for $200k, then rehab and sell the property for $300k, can you write off the uncollected $200k (the $500k - $300k difference i.e. not pay taxes on your profits, as on paper as the lender, it is a "loss")?

What strategies exist? Thank you in advance!

[Patrick Desjardins]

Ehhhh. I am not a CPA, but your basis would be what you paid for the note, not the UPB. In this case 300k - 200k - your expenses. You didn't lose 200k, the seller did, and they would be entitled to count it as losses.

Someone correct me if I'm wrong but I doubt it.