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.

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

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.

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.

Quote from @Brian Dela Cruz: @John ChapmanTypically, this would be treated as a sale, unless you reinvested the insurance proceeds into another rental property within two years (by either rebuilding or replacing), you can defer the tax under IRC Section 1033. 

As others have mentioned, DSCR loans are generally for turnkey rentals (although outdated rentals may still qualify depending on the level of deferred maintenance). 

Doing general paint and carpet cleaning for this property along with some minor repairs, junk removal and fixed a couple small plumbing issues (mostly deferred maintenance).

This would be an opportunity to discuss deferred payments and a 5 year balloon. 

I see about the opportunity zone funds, but it is for accredited investors that need to put gains into something to defer.   

Also I am assuming from the title of the post that if you were to sell the property you would be doing a 1031 to defer the taxes?