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Hello. My name is ***** ***** I'll be the Expert assisting you today. I look forward to helping you with your issue today. The purchaes of the house as well as any acquisition expenses would increase the basis of the asset (house). Any renovations incurred to improve the house and get it ready for resale are also included as increases in basis. When you sell the house in the future the taxable gain will be the proceeds from the sale of the house less any selling expenses less the basis in the house (basis in the house will include the original $17k purchase price, any acquisition expenses and costs to renovate). As such there won't be any tax deductions in 2016 since this is held for investment. The property is treated similar to inventory and income/loss is taken when you sell the home in the future tax year.
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If the income was self employment income then she will have to file a tax return since its over $400.