Selling for $380k means an $80k taxable gain at long-term capital gains rates (0%, 15%, or 20%, depending on income).The $80k HELOC used for personal debts doesn’t affect your taxes.A 1031 exchange could defer taxes, but you’d need to reinvest in another investment property, not a home for your mom.

Certainly more areas with lower property taxes.

This could reduce your help lower your taxable income if the investment aligns with your lifestyle goals.

The insurance payout also impacts your taxable gain.

Alternatively, your in-laws could partially gift the property by using the annual gift tax exclusion ($34K per couple annually), lowering the sale price and their taxable gain.

At 5.6% ownership, I would expect to make approximately $900k = ($27m - $11m) * 5.6%.I expect my taxable gains to be approzimately $336k = ($27m - $21m) * 5.6% Does this sound right?

Tax-wise, only the rented portion is deductible, and depreciation recapture applies on sale, increasing taxable gains.

If a cost segregation study was performed, the accelerated depreciation may further reduce the property’s basis, potentially increasing taxable capital gains when sold.Depreciation recapture will occur when you sell the personal residence, so it’s essential to keep detailed records of all depreciation claimed while the property was used as a rental to ensure accurate tax reporting at that time.This post does not create a CPA-Client relationship.

This 1031 Exchange Calculator can help you model out the taxable proceeds based on various situations. 

We are looking towards STRs in order to lower our W-2 taxable income via cost seg and bonus depreciation.I believe my line of work qualifies me as a REP, but what I am not clear on is whether I would still need to meet the 'material participation' requirements in our rental business in order for our losses to be non-passive.