If the tenant fails to provide proof, I would reach out to a local attorney about handling the lease violation appropriately, especially since Texas has specific landlord-tenant laws.

Hey @Anthony Sigala many folks might be optimistic about this rule but the "rule" was created during a very specific and particular time in real estate as a way to help newer investors have a framework on how to approach rental properties without going in blind.

A lot of subjective/anecdotal criteria here.

Are there any specific clauses I should include in a room-by-room lease for a shared living space?

Doesn’t mean you can’t find a good deal, but from our quick search while we were there in May 2022, none of the places came close to meeting our criteria

., through a Tenant-in-Common (TIC) agreement), as partnership interests are specifically excluded from 1031 exchanges under IRC 1031(a)(2)(D).

I’ve never had this specific issue but mistakes like this are pretty common. 

I will preface this with the fact that I have a legal background, specifically with estate planning and asset protection.

Yes, they are getting higher than market rent for that specific Neighborhood, but they also have a hard time finding a S8 tenant that wants to move into and stay in that Neighborhood.

Selling your share at fair market value could avoid gift tax but may trigger capital gains tax for you based on the sale price and your cost basis.In California, the transfer may also trigger a property tax reassessment under Proposition 13 unless a specific exemption applies.