Variances are usually issued for hardships or unique circumstances.

Is there anything I'm neglecting?

Under no circumstance should you just wait for her to leave. if she is leaving soon, make sure you understand the laws surrounding returning security deposits as well.

Michele, that's exactly what he meant, but neglected to say it.

After the sale, the borrower no longer has any say about the property unless they are in a redemption state and meet the requirements for redemption.These are General Guidelines and by no means are applicable to all jurisdictions and every circumstance.

A good rei tax pro can figure it out to tour specific circumstances. 

The circumstances surrounding it aren't the greatest, as he was essentially screwed by his wife's sister after she agreed to use her credit to get them into a house that they paid down for $400K over 10 years, she didn't pay the down payment, or taxes an insurance, and now she is demanding more than half the $500K equity after saying multiple times in 10 years she wanted nothing in return.

@Joe Gamatoria I can't have 2 FHA loans in my name unless I meet a set of very specific circumstances, which I do not.

I'm talking decades of neglect, which probably means a teardown to the bones and hoping the bones are still good.

The penalty and tax will remain, but there may be other offsetting tax benefits in other areas that will help lower your overall tax bill.Your expenses to fix up the house can either be an immediate expense or a depreciating asset, depending on the facts and circumstances surrounding your "in use" date.