The only part that Property 1 pays on that loan is the escrow for property tax & insurance for Property 1.Thank you for your insight.You need to look at purchase price to determine cost basis, not how you financed the purchase.

Stationed there almost three years, sold with profit and tax break for how long we lived in the house.

You'll be able to defer a bunch of tax with this purchase. 

It’s a tax office, so I suspect they might be waiting to see how their business performs and the impact of technology before deciding.Thanks in advance for any advice or insights you can offer!

It will have to be a pass through/disregarded LLC to keep the tax payer the same and the 1031 valid.

On top of that there was an $8,000 tax credit, as an incentive since people weren’t buying.  

You want to make sure the seller is getting their fair side of the deal but especially from a tax perspective, there are ways in which you can make it very lucrative for them.

Here are some thoughts I hope help.The benefit of selling now is that as an inherited property you will likely pay no taxes because you inherit it at a stepped-up basis.I'm not a huge fan of buying a house that has lot rent.

As soon as people receive their tax refund checks, they will be knocking down your door.

Years ago we didn't require it and just recommended it to the tenant, but it's so cheap and gives our insurer something/someone to abrogate against should we have to make a claim that we don't allow it to be optional anymore.