@Matt Hoyt and @Russell Brazil Thanks for your replies.Am I incorrect assuming people say residence when they only plan on renting it out?  

Please let this know if that assumption is incorrect.

So verify and make sure that you are doing it in accordance with tax laws.As suggested above please correct me if I'm wrong,  I do not mean to publish incorrect information. 

This will prevent you from sending the subsequent mailings to the incorrect addresses.

Perhaps he could have been wrong or gotten something incorrectly, since the property was officially listed as 3 unit MFH.

Irrespective of whether you claimed it over the years or not.For the past I can't, unfortunately, tell you how to fix this and if it's even possible past the 3-year period during which you can amend your returns (which you probably should do together with a CPA) But what I would recommend is to file for an extension with the IRS so you have more time to have a CPA look into your situation rather than rush into a (mostlikely incorrect) filing.

Please let me know if there's anything incorrect with my thinking. 1.

Sorry the above info is incorrect...He did send me the figures and the rent is only $12k a year which is 13% less expenses its only a 9% cap.

@Ned Carey I am sorry I was using incorrect wording :) I am purchasing a Tax deed!  

I had heard that some zoning had recently changed to allow for greater density, but maybe this was incorrect?