If you live in it for two years, you should be able to sell tax free up to 250k if you're single.

The 1031 exchange is what allows them to do this without having to pay tax on the gain or depreciation recapture. 

Malibu allows it but requires a 15% "hotel tax" on the gross revenue.I would recommend looking out of state or underwrite the property as a long term rental in the event laws change.

Weirdly, you may actually be able to get better terms and/or more LTV on the refinance if there is debt on the property as lenders have rules for max cash in hand (max proceeds you get at closing) for cash-out refinances.  

Also, I'm not sure how you're paying attention to it on the tax side, but the unit that you are living in's profit at sale is calculated differently than the other unit that you're renting out.Once you move out, that unit is officially available for rent so from that point forward, any profit gained at future sale will be calculated starting from that point and will be taxable.

Income would be from hunting dues and timber harvesting, expense would be conservation management, taxes, and the mortgage.

You'll likely also reduce your cost of living by moving to a stabilized apartment.Depending on the cashflow and debt paydown, you can use this strategy until you've built enough equity to reinvest.On the other hand, getting into a multi-family after refinancing will also help you build substantial equity to rinse and repeat in the coming years.

The main reason I ask is because that is significantly below primary residence mortgage rates let alone any investment loans, if you can get rates like that I might need to make some changes on my end hahahTo answer your original question, assuming all else is equal long-term fixed rate debt is valuable. 

On your tax return you would report the proceeds, subtract costs and proceeds paid to seller, then the remaining profit would be your flat fee.

If you're still looking for a CPA/Tax Strategist in California feel free connect.