Transfer taxes - encumbered property transferred into a land trust is exempt from doc stamps. 

Update:First, thanks for the all the replies.Second, the bank confirmed my SFR rental mortgage is in fact categorized as Commercial.Third, they said that since I don't have a total mortgage balance of over 250k with them, I'll be exempt from the extra paperwork hassle.

@Brian Howse hey @Ather Taqui, if you do a umbrella policy it will cover liability and medical payments on all of your investment properties.

Several of my recent buyers have been medical and legal professionals with high taxable income, that are looking to expand their value portfolios by incorporating an accessible short term rental property (often doubled as a legacy anchor) that will often offset or 'pay for itself,' in tax savings. 

In the Lincoln City/Newport area there is a lot of hidden potential for MTR or medium term rentals (furnished 30 night+) as there are medical and coast guard professionals that need long term, convenient housing.

These are often used for difficult to insure trades or businesses (ie. medical Malpractice, asbestos removal, etc.). 

And taking the $250K does reduce your reinvestment requirements for the 1031 by $250K.But the 121 exemption isn't "carried forward" any further than the 5 year look back.

The other problem with putting your personal home in an LLC is that you will probably lose your homestead exemption, and end up paying more in property taxes.

Thanks for your time.you will need to see if they received a special exemption or permit to run it as a duplex.

If that is what they are telling you, then I would research it further, it necessarily may not need to be torn down but it may not be able to be used for residential use, but typically you can also get special exemptions/permits too