"The short answer is that your references are partially correct, with a loose interpretation of Code Section 707 and a court case (Pratt Vs Commissioner from 1975).  

What may have been missed again is that states have established limitations and have approval at the federal level in doing so, but are subject to interpretation at the federal level. 

Apparently there are different interpretations, but I've seen this one more than the expense-now position. 

If you do not take the time to understand and properly interpret the HOA finances AND their Governing Documents, it is more likely to end badly than not.How the Buyer Agency fee is (or can be) handled can vary by state, but you generally can address it in your purchase offer by requesting the Seller's stated commission be reduced.

My answer is that they can not, an impossibility to perform by one who is not formally trained in servicing and collection.It would serve the public good if some would stop interpreting finance law as if to imply that just anyone off the street who did a seller financed deal can act in compliance, reading statutes does not explain all the details involved in processing, underwriting, originations or servicing of seller financed transactions, the statutes refer to other regulations and guidelines.

This definition leaves room for interpretation but it is important to define what that means to you and be able to back up your own personal definition.

They are very easy to read and help interpret real estate to beginners.

If you need help interpreting your COE and how to use that link, let me know.

And, in some instances, simply having a business purpose may not totally swing the loan classification to a commercial classification with a residential property.All real estate is local, meaning how rules and regulations or laws are interpreted will be by what is usual, customary and accepted in that local jurisdiction, that judge in your courthouse will tell you what is to be followed.

The interpretation of tax rules can also depend on various factors specific to your situation.