Ah, the world of the "live-in" fix up property!  The rewards you reap may be substantial.  Not only can you write off the interest on your loan for the home as your primary residence, you can also avoid the nasty capital gains tax.

But, beware of the downside of the live-in-it while-you-fix-it-up-situation.  You may be living out of boxes, washing dishes in the bathroom sink and microwaving frozen dinners in your bedroom.  After a long day at work, you can look forward to a long night of scraping paint or sanding floors.  If you have children, things become even more complicated.   Living in a house under construction can be a strain on all family relationships. 

On the other hand, the rewards can be worth the effort.  My advice, especially for first time Fix and Flippers, and those with children, is buy something you can live in during the remodeling.  If you can find a house with two bathrooms, you can use one while the other is torn up.  A bedroom or two that don´t require major work are also a plus.  Select a house that needs TLC, not a wrecking crew.