He is older and does not have a mortgage and there is a lot of deferred maintenance on the property.

Selling a primary residence and then buying it back as part of a 1031 exchange could raise red flags with the IRS.Your parents have a valuable opportunity to defer a significant amount of taxes by utilizing the $500,000 exclusion on their primary residence.

So if you suddenly find a great deal and want to go for it, a tax return showing a massive loss could hurt your pre-approval chances.That said, if you’re not planning to buy anything else soon, deferring the depreciation might not be a bad move.

Maybe.What is the deferred maintenance?

To minimize taxes, consider the following strategies:1031 Exchange Before Dissolution – The corporation could complete a like-kind exchange, allowing investors to roll their ownership into individual properties while deferring capital gains tax.

Once you convert the former investment property to your primary residence you will then start to convert a proration of the gain from tax-deferred to tax free (according to the number of years it was rented/lived in). 

Alternative strategies include tax-loss harvesting to offset stock gains, using cost segregation and bonus depreciation for real estate deductions, or deferring real estate capital gains through a 1031 exchange.

This would allow you to defer the capital gains tax, and instead of taking a large tax hit, you would be able to use the tax to invest in a nicer property/properties.

STR loophole or strategy is a great way to help defer taxes. 

I’m not sure you would want to include this in the letter, that is where you would defer to your attorney, but you might inform the “victims” that if there is a problem they need to contact the police.