If I do, I need to sell it by July 2026 in order to not have cap gains. We lived in two of the last five years up until July 2026.
I haven't been like I should watching the market like I should. I want to have more re...

Negligence is only a cause of action when there is a legal duty owed. 

During the 2years we’re spending $ on attorney fees, and I’ve got that “queasy” feeling, especially since it’s questionable whether or not the properties are worth the amount we are owed. 

I'm not sure how they paid so that may or may not be a solution here...The other thing is technically your tenant owes you still, and the prior LL may be liable for fraud.

Otherwise you could end up owing more than what the house is worth, which a lot of investors are struggling with now. 

However, that inheritance tax is still owed and is a lien on the property even though IT IS NOT RECORDED ANYWHERE!!!

Would it apply to a lender who was collecting a debt owed to itself before it fell into default? 

The ones that really interest me I will respond to and of course those who donated to my charity :)  and or send me gifts :)  But those who just think a quick sentence and we owe them  Nope just say thank you but I no longer do that. 

Of course to maximize your tax benefit it needs to be sustainable over time. 

We owe about $140,000 on the duplex and about $225,000 owed on the SFH.