This is most of the depreciation you are taking year one.You can calculate your depreciation recapture by taking the sale price of the asset and subtracting the adjusted cost basis.The adjusted cost basis is what you paid for the asset plus any improvements you made along the way minus the depreciation you took along the way.The profit above this original cost is taxed as a capital gain, but the part linked to depreciation is taxed at a maximum rate of 25% under the unrecaptured gains of section 1250.To recap the tax rates are:- Sec. 1250 real property: 25%- Sec. 1245 property and 15 year 1250 property: Ordinary Tax RatesThere are ways to minimize depreciation recapture especially if you know how to work smart with your CPA.1) Asset Valuation at Time of Sale - Sellers can minimize recapture by reallocating the price of the assets on sale.

The seller has considered seller financing with 20% since this is a paid off property.

If indeed it is stated that the second lien foreclosure is subject to the first, then no, the first will NOT be paid off. 

Some say we have to buy the house with them or we paid too little for the property and finally after going back and forth and submitting all our paper work and paying for appraisal they now tell us they didn’t realize that the property had so many bedrooms and they said they do not loan to properties with so many bedrooms.

(other issue was a leaky toilet we took care of, at our expense).  

The LLC only holds the raw land and it's completely paid for.

If tenant raises factual defenses such as falsifying the lease or claiming they paid rent, there would be a brief trial which you would be prepared to testify against. 

However, if you are profiting over 6 figures, the property might be too expensive to live in order to truly house hack.

I've even paid for a subscription to have limitless access to all articles on multiple of these websites.

So as long as I paid no issues.. and most of those I sold on wraps. when i started buying homes via sub to I did over 100 of them..