In most cases, affected taxpayers need to fill out and attach Schedule B to their tax return.

And it doesn't really cost the taxpayers as much money as they're putting out because the principal is getting returned to the taxpayer when that buyer sells the home.What I really like is that its only for first time home buyers and only for new construction. 

The IRS has issued a warning to Tax Professionals to beware of scammers that are trying to steal business and taxpayer information.

But if you lived in the property for 2 of the last 5 years, you should be good to do the section 121 exclusion - but realize that is $250,000 per tax payer.  

Deductions are a matter of legislative grace and the taxpayer bears the burden of proof, both of production and persuasion.

Income from a trade or business where a taxpayer doesn’t materially participate.2.

In essence, you cannot simply transfer property to a dying person who then leaves it back to the taxpayer/original owner to leverage a basis adjustment to the date of death value.

Most people will tell you that your second choice can't be done, but the IRS has issued two (2) Private Letter Rulings on point where they did allow the taxpayer to build on property they already owned through a 1031 Exchange. 

Quote from @Chris Seveney: @Alicia ZhaoI agree with jayIinterest income = ordinary incomehttps://www.fidelity.com/tax-information/tax-topics/interest-income#:~:text=Most%20interest%20income%20is%20taxable,it%20or%20can%20withdraw%20it.There is a lot of different terminology used in the tax world.Interest income, for the average taxpayer, will be considered 'portfolio income'.

This is abuse of tax payers to be honest.