The law (and hopefully your contract) require them to return the property in the same condition as it was received, minus ordinary wear and tear.

However, the remaining gain not covered by the Section 121 exclusion is taxed at your ordinary income tax rate.Here's how the calculation typically works:Calculate the Depreciation Recapture: The $9,000 of depreciation would be recaptured at a maximum rate of 25%, which is $2,250 (25% of $9,000).Calculate the Remaining Gain: Subtract the excluded amount (Section 121 exclusion) from the total gain: $100,000 (Total Gain) - $9,000 (Depreciation Recapture) - $250,000 (Section 121 Exclusion) = $0Tax the Remaining Gain at Ordinary Income Rate: Since the remaining gain is $0, there would be no additional tax on the gain.So, based on this calculation, it seems like there should not be any additional tax owed after taking into account the Section 121 exclusion and the depreciation recapture at a maximum rate of 25%.It's essential to review your calculations and ensure that you are accurately applying the exclusion and depreciation recapture.

Single family homes regardless of market  are very inefficient to operate to begin with but the lower price point homes are disproportionately impacted by ordinary upkeep maintenance, repairs and cap ex because they struggle to absorb these costs (some of which are fixed or close to fixed regardless of whether this is  $100,000 house or $300,000 house). 

In addition depending on the lender the person losing the home could get a 1099c which would be treated as ordinary income.

I typically only buy notes in my account though since notes are taxed as ordinary incomeI can see a point about depreciation but when you exit a property you pay depreciation recapture tax so I think it’s over exaggerated about losing the benefits of tax deductions as you are not paying taxes on the income anyways.

I'll add another piece: with interest rates on the downswing, bank on refinancing and higher cashflow in the near future.This may well not be what a "more successful syndicator" would do, but it wasn't a more successful syndicator who asked the question, just an ordinary mom and pop investor who's looking to expand on what she's got.

I don’t know why finding the right broker is something out of the ordinary, when finding the right brokerage to allow you to utilize all your skills and allow your full potential is what i want and what everyone should want!

Hard to see anything out of the ordinary at all in this. 

You will pay ordinary income on the interest.

If he purchased the home for $100K then he would owe $75k in capital gains taxes at his ordinary income base.