If you just take the 13,835 financed at 6% you are adding 83 dollars a month. so a double whammy.Now, lets consider if rates drop to 5.5% in 24 months (not a prediction just a what if) and you could have refinanced at a much lower costs then the above scenario in what you paid in pre-paid and additional interest. on the other hand, if rates for your same scenario after your 5 year payback period is 9, then you will have an asset with a much lower then current market rent.  

Additionally, the supply of homes for sale is constrained because of this and will be for some time putting upward pressure on prices in most markets.Thinking about renting your house in Seattle would be wise as someone else will pay the mortgage down, and rents and the value of the property will go up over time.

(replacing the original HELOC debt) However whether the interest for the  additional $200kish of loan  will be deductible will depend on 2 things: -How were the renovations paid for?

This is only a guess, take it with a gain of salt. 

If they have a loan at a favorable rate, I give them additional money to take over the loan.

It sounds like you’ve got a solid foundation with your rental property, and I love the ambition behind your plans to build a property management and maintenance company—it’s a great way to take control of your investments while creating additional opportunities.Best of luck to you! 

Then when you sell another 22% and 8% on that gain?

So your additional ~240 SF could be the foyer, hallway and bathroom spaces that are allocated by percentage to the unit.

This money will be used to pay down some debt I have and also purchase 1-2 additional rental properties.  

You may need an independent appraisal if the value of the property exceeds $5,000, as the IRS generally requires this for non-cash donations of significant value.Capital Gains Considerations: If you've owned the property for more than a year (which you have, having owned it for 10 years), the house is considered a long-term capital asset.