But they do audit closings to see if the correct transfer taxes are being paid, and when they audit they ask the buyer, seller and title company to explain the transaction, even requesting a copy of the agreement(s).

Makes an important distinction as I like to think of an exchange as kicking the ball down the road and that is the reason they are not heavily audited.

No commingling of funds prevents a state audit while they look for "use" tax issues and start charging business tax on your daughters new shoes.

All of these projects will commence after we close on the next house.What's the best way to separate  improvement form repair and not make myself an audit magnet.

There are fraud audits immediately after loan closings.

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Do they justify a more aggressive tax planning and reporting strategy......after that, ask what % of their work has been challenged or audited and their win record.

There is no due on sale issue here it's being paid off.It's a back door to limit liability, bringing them under the umbrella of the LLC, at that point it's a contribution to capital, then the next step is a partner/member buying out the capital contribution.Thinking, additionally,It also hides the audit after the transaction of the short sale, they only see the property titled to the LLC, if the seller are then excluded out of the LLC from the sale of their capital account, the property remains as titled, again hiding the husband's interests.

It's my understanding that the seller will be required to pay interest only when IRS audited the tax return?

When the numbers match; they are less likely to audit your return.