In some cases, after running the numbers, I’ve even faced potential negative returns, causing me to miss out on promising deals here in South Florida.That brings me to my question: I currently own two homes—one is my primary residence, and the other is a rental property.

I can’t imagine the returns you would have to generate. 22% federal tax, plus 8% state tax, plus 10% penalty.

Multi-family properties many times provide a better return per square foot than single family, which would be to your advantage as well.As long as you're mindful of the reinvestment requirements and purchase at least as much as you sold and use all of the proceeds, you shouldn't have any issues with this strategy.

@Chinku Chinku the rich get rich by making their money work for them.They borrow at one rate, to invest in something that returns a higher rate - they profit on the difference.Only you can evaluate your risk tolerence though.

He is very good about deductions on tax returns so his income looks negligible and of course banks wont talk to him about loans.

Hey Keegan for the best return, I would say AZ.

This deal aligns with my strategy of adding value and achieving robust returns.

And while a 1031 exchange isn’t an option, some people explore alternatives like installment sales to spread out taxes or even tweaking the investment structure so your returns are treated as interest instead of equity.There are definitely some creative strategies out there. 

Here's their page called My Lodge Tax, for STRs. https://www.avalara.com/mylodgetax/en/index.html Process returns, Save time and hassle.

Then you 2 would agree on how you would split the profits once the property is generating cash flow and the original equity is returned.