Living in one unit and renting out the others allows you to deduct 75% of expenses like mortgage interest, property taxes, insurance, and shared repairs as rental expenses, while the remaining 25% applies to personal use.

I see what you're saying about the 2% rule. 

A 1031 exchange does not apply to primary residences.If you plan to use the proceeds to buy land for a business, consider whether the land qualifies as an Opportunity Zone investment.

But if they don’t even bother to fill out the forms to apply, or get a basic job to make ends meet, or borrow money from family or friends/ somebody else besides you, then they can’t stay.

Apply here: https://airtable.com/appnZ2AGUknfciOzu/pagvbFaEPNprDBVKi/for...

Do I need a zoning attorney or can I apply myself?

However, even in an equal exchange, recapture tax might apply.

You can still easily find the 1% rule and positive cash flow and there's amazing appreciation potential.

Since you’re considering converting the upper unit into a short-term rental, you may also want to implement strict rules around smoking or strong odors in your house rules to avoid future issues.

And, sounds like you're exactly at the 1% rule, which is golden!