The mechanism for avoiding double taxation in these circumstances is usually a tax credit for taxes paid to another state.

This is imp distinction if you have both passive loss and income. 

My circumstances are a little out of the ordinary. 

Sierra,This is why we require tenants to have a renters policy.In this circumstance, I would probably split it down the middle.

However, after researching it and having her actually do her homework it came to light that divorce, separation, health issues, moving for a job, and a few other extenuating circumstances were the only exemptions for no paying capital gains before 2 years of having it as a primary residence. 

We lived in it while fixing it up and planned to remain in it as our family home but circumstances changed and we ended up selling it for a great price and buying into our next property.

I distinctly remember one advertised 3-plex where they said the annual expenses were something like $1800.

As a licensed CA agent, the Seller probably has a duty to disclose that they are a licensed agent.You didn't know they were an agent when you submitted your offer, so you didn't include it in your offer.In their counteroffer, they are adding a disclosure into the agreement that they are an agent, as they are presumably required to do by the state of California.While I don't know the whole circumstances, nor am I licensed in California, that seems fairly normal to me.

I was en route to Law School as recently as 2 weeks ago but varying circumstances has led me to decline that option as I believed it would ultimately slow down my true goal, which was investing into real estate rental properties as soon as possible. 

However, a person shall be deemed to have notice of a fact if he has actual knowledge of it, he has received a verbal notice of it, or from all the facts and circumstances known to him at the time in question, he has reason to know it exists.