So there are a few ways to look at this, the 1st question is are you sure your renovation’s will double the property value, most renovations on primary residences, your lucky to get 60-70% of the dollar cost back out upon sale, so really nail down your comps, than you have basically a math problem if your rate on your primary goes up how long if ever before that extra payment is more than 400k in taxes, that’s just a simple calculation to help you decide, but I suspect you actually have a different question here, from a purely financial perspective my guess is the best option is to do anything to avoid that tax hit, but one of the reasons to make money is to spend it on things that you enjoy, based on your overall financial picture and a subjective view of how much enjoyment you will get out of a renovated home, you should decide if you want to roll your profit into another deal or “cash-out” your winnings, I love cars and I’m willing to spend more than is fiscally smart on them because they bring me joy, there is nothing wrong with that, but i don’t think it’s a fiscally smart choice, without knowing your exact property id imagine a renovation would fall into that category, so that’s the terms I would use to decide.

Would a cease and desist letter be the first warning for an STR if the city actually tried enforcing it?

Since you own it outright you'd be able to get 100% of your construction costs covered as well as closing costs and payments rolled in .

Most of what I posted is from the book referenced by the OP, except for the portfolio statement.Because the OP was given only one total tax number from his CPA, my thought was, from his “portfolio” of 8 properties, to roll-up the individual ‘Cash flow before taxes’ into one number and subtract the ($3,000) total tax bill to get his net income.

Practice these answers until they roll off the tongue.

The reason being you'd be leaving a super low rate (comparatively) to then roll it over into something more expensive.My answer to your question is the same I give myself and my clients: It depends on what your situation & goals are.

I'm just thinking ahead, say that the 29th or so rolls around and they tell me they're moved out and there's some items left behind.

We roll the dice, but we buy name brand with center agitator (we like Whirlpool).

While discussing various strategies with another investor friend, I suggested that I’d like to do a 1031 exchange, taking my equity and rolling it into a smaller home to start my BRRRR endeavors.

It never ceases to amaze me how these questions immediately expose how inexperienced and naive these folks really are.