In my experience, a large percentage of them are fully functional adults that refuse to take personal responsibility for their lives, which is why they are receiving free rent from taxpayers instead of working for a living.

There are several articles that do an exceptional job of explaining who, what, where, why and how tax payers qualify for the ‘STR Loophole’ listed here:The Short Term Rental Tax Loop Hole: A Game Changer for W-2 Wage EarnersThe Short Term Tax Rental Loop Hole: What Investors need to know The implications on the Oregon and California Coastal STR market is a strengthening buyer pool for luxury rentals in the $750-1.5M+ range.

Quote from @Melanie Baldridge: Why I like investing in real estate more than 401(k)s.Both offer tax deferrals, but here's the difference:If you're making pre-tax contributions to your 401(k), then withdrawals = ordinary income tax.With real estate gains, you're paying capital gains tax (which is typically lower).Plus, RE investors get:1.

Taxpayers within these zones are automatically granted this relief without needing to apply, offering some respite as they focus on rebuilding their lives.

In your case, changing the property from a rental to your primary residence constitutes a change in use.The depreciation recapture will be calculated based on the fair market value of the building at the time of conversion, not including the land value.Since you're tearing down the existing structure, the entire amount of depreciation taken over the past two years will likely be recaptured, as the building's value at conversion will effectively be zero.The recaptured amount will be taxed as ordinary income, up to a maximum rate of 25% for residential rental property (Section 1250 property).

The only thing that sounds out of the ordinary here is the water bill

There are several out there that I am aware of that are taxed at rates which are currently lower than ordinary income rates. 

If you had identified the property, the cost and the travel cost would have been added to the basis of the property and depreciated.These initial investigatory costs are treated differently for flipping and rentals.1) Flipping: The travel cost to investigate will be treated as a business cost and deducted as an ordinary travel cost.

@Muhammad Kashif Flipping a property in 6–9 months results in short-term capital gains, taxed as ordinary income (up to 37% federally, plus NJ state taxes up to 10.75%).

Quote from @Conrado Balicusto: Quote from @Chris Seveney: @Ryan DaultonWe use it for private lending - because the tax benefits are lost with real estate When lending usually it’s taxed at ordinary income rates if using your own cash so using a sdira I prefer for lending and my w2 income savings for real estate to maximize tax efficiency  Thank you for the insight on private lending and tax efficiency.