They were going to occupy one side and rent the other exclusively through AirBnB. 

Make the tenant pay, make your criteria very clear and as exclusive as is needed

Room of investors buying and selling exclusive (non-MLS) wholesale deals.

According to the newspaper they had taken five new contracts out within a week of filing--1/3 of the cost of the contract upfront. 

When someone pays the Option Consideration, they are paying 100% for the Exclusive Option to buy the property within a stated period of time ..they are NOT putting up a down payment on the property.

Normally installment sale has three components1) Your basis that is not taxed 2) Capital gain ( not taxed as your home qualifies for sec 121 gain exclusion) 3) interest - taxed at ordinary rate.  

Not exactly:If you moved out in 09-14 and you move back in now, until 09-19, that year up until 09-14 drops off as it wouldn’t be within 5 years.Also, since you lost the 121 exemption in 09-17, if you moved back in for the 2 years you’d need, you wouldn’t get the full exemption.....it would be prorated based on the number of years you did occupy verses those you didn't.In your case, at 09-20, it would be about a 2/3 exemption (8 years verses 4).Also important, the 121 exclusion only applies to the Half you lived in.....the other half is treated like an investment property.You’re also going to have depreciation recapture on the other half, plus your half while it was a rental.  

I personally made the mistake of not following up with CRE agents early on, and focused exclusively on the MLS listings which I have access to as a realtor.

Also when you sell, and qualify for the 500k exclusion, you have to recapture the depreciation.

I will throw in (only for you) an exclusive 1-of-a-million t-shirt and Walmart swag.