Here's the excerpt:...I was working on tearing up the crappy linoleum floor in the kitchen when I had an epiphany.

I read that the Gates decision says that if I tear down the old house to build the first two then I lose the capital gains exclusion.My question is: Is there a way to structure an arms-length partnership to buy the house and two lots - allowing the exclusion - but then also allowing me to gain some of the upside of the new home sales?

I think even if you try to scrape them the community would say " This evil outside developer is tearing down our community and forcing us to leave .....blah, blah, blah. "  He will be crucified and vilified no matter what for him wanting a personal gain at what they think is their expense.A pancake no matter how flat you make it always has 2 sides. 

Assuming the claim won, does anyone ever able to collect money from tenant either through their pay check deductible, debt collector, get arrest warrant for non-payment ..... etcI guess tearing up the carpet, put a new floor/carpet on, cleaning fee, wall damage, I am also planning to charge her for breaking the lease (charge 2 months, is it reasonable?)

That is part of normal wear and tear, and basic maintenance of a home, and adds no value. 

Not easy to support a house, especially if it is a tear down, has bearing walls, or need to jack up the second floor to demo the first.

I have not seen the job they did today (which involved tearing off and hauling away all of these supposed 8 roofs) as I got called to work, and the roofer is coming back tomorrow to finish the job.  

We buy properties, tear them down and build new ones or remodel them and sell.

You might wholesale a tear down while they short sale an overlevereged property.

Please tear this idea apart and let me know what can be improved.