I would never "gut" a house unless it had an issue requiring it (water and mold, smoke damage, termite damage, etc)We usually will "fix" something instead of replacing it if we can. ie, a door with damage gets wood putty or sheetrock mud and then a repaint.It's always a balancing act to put a property in market condition and still have the margin  for adequate cash flow.

I hope I don't need to pay taxes until I "recover" my initial investment cost (that was 115K) or basis.I am planning to talk to title company and probably lending attorney to "minimize the damage".What is the closing costs for seller financing deal in comparison with conventional buy/sell transaction?

They mentioned to us about roof damage and reminded us about the shingles that flew off during Hurricane Irma.

Who is responsible for damage caused by the tree? 

I'm going to be a bit of a contrarian to the above posters, but let me first qualify my post by stating that your market will determine what you should do.We frequently install en-suite laundry in our units - in fact, we have removed common coin-op laundry in most buildings of 6-units or less in favour of en-suite laundry - for the following reasons:electricity and, in most cases, hot water costs are transferred to the tenant;where water is sub-metered, water costs are transferred to the tenant;high-efficency residential laundry machines are about half the capital costs of commercial coin-operated machines;we can command $30 - $50/month in additional rent with en-suite laundry;by installing our own machines, we know they are installed property, with catch/drain pans and {going forward} leak detect shutoffs; andwith en-suite laundry vandalism of laundry machines has been non-existant ... and if a machine is damaged, we know who is responsible.We have a good rapport with a couple of local appliance suppliers and get called whenever they have "dinged and scratched" units to unload ... a small, cosmetic dent in the side of a washer - which will never be seen when it is installed in a laundry closet - can be worth a 40 - 50% discount.  

Their was water damage that scared everybody that looked at property, but it was an all brick home on slab.

I'm less concerned about cleanliness than I am about damage to the property.

I'm just worried about leveling the house which will require interior piers and exterior piers and other damage that might occur after the house is lifted/leveled... 

I don't think they would damage a house burrowing under a house, but their holes could certainly break a horse or cow leg. 

Good owners, you won't have any damage, but bad owners.. well if you ignore a dogs emotional or physical needs, your property will suffer, so just make sure you're aware of it.