Hopefully someone with tax accounting knowledge can jump in here with more detailed analysis, but I looked at this a bit several years ago...1) You still have to pay the depreciation recapture on the sale decreasing the net benefit of this approach due to the large tax payment in the 'sale' year2) The LLC would need to not be a passthrough entity so that it can be taxed separately from you, so you have to add another tax return cost for the years going ahead3) Taxing it separately from you likely means corporate status and corp. taxation rates which are higher than yours and I've heard many times over the years to avoid titling real property as a corp...Overall from what I've seen this only makes sense in a select few scenarios, which for most people aren't in play. 

Fast forward two months, and now the property is rented out, so I decided it was time to refinance.

Steve,Welcome to the BP forum and great time to get back into the REI world.

Everyone’s journey is different, so be sure to take your time and don’t hesitate to ask for advice!

Curious why any tax pro would argue with that.If filing state tax returns did not take any time or money, then there is no harm in filing them.

If the company would not write this policy this way, you may have an issue at claim time. 

The seller is out of state and even visited the project a few times to check on the progress which I think helped him feel good about the whole deal as well. technology made the whole process a lot easier in the interim.

You said you've owned the property for 8 years; that's like 2017 which was a prime time to buy.

I am a part time agent and investor located in Leander, TX.

I'll also add that guidelines change over time. just because they don't like it now doesnt mean they wont decide later to be okay with it.