Here is the quickest way I can explain it.

I checked the instructions for Form 4797 or Form 1040 Schedule D, and neither explain how to indicate that the gain is deferred and not taxable right now.So either: 1) Form 4797 is irrelevant to my exchange and I don't need to file it at all, or 2) I am missing something. 

I would contact them ahead of time and explain the situation so that they aren't scared by the change.

Quote from @Jared Rollins: I was hoping someone had a street-by-street map to stick to of Detroit and also could explain to me how to assess the future taxes on rental properties.

I didn't end up buying it but called the buyer's agent who sold it and explained it to him so his buyers would think he was a savant!

Include a short, clear note explaining that payments are still being sent to the prior owner despite submission months ago.

Whoops, just noticed Adrienne already explained that.But I tend to agree with @Jason Wray about the plain overall facelift.

Am I comfortable explaining this with a straight face in court?

I actually think the points you’re raising explain why Mackay still represents opportunity rather than why it should be dismissed.On the local resistance point, that dynamic exists in every mountain town before it changes.

Quote from @William Thompson: One thing I see every tax season is investors depreciating their rental property incorrectly — not because they’re careless, but because no one ever explained what actually gets capitalized.Here’s the simple rule of thumb:Your starting point should always be your HUD-1 / Closing Disclosure.Typically capitalized:Purchase price (excluding land)Facilitative acquisition costs tied to the purchaseTypically not capitalized:Loan costsOperating expensesEscrow items (taxes, insurance, prepaid interest)When everything gets lumped together, depreciation gets distorted — and that can lead to problems later, especially if you refinance, sell, or do cost segregation.Getting the capitalization right from day one makes everything else cleaner:depreciation, tax planning, and future exits.If you want a second set of eyes, DM me “HUD-1” and I’ll help make sure your property is properly capitalized.Curious — did you ever review how your rental was originally capitalized, or did you assume it was done correctly?