In California in the property tax bill you can see sometimes the land is 90% and the structure is 10% but the reality to rebuild the structure can sometimes cost more then the house purchase price.

This plan should include budgeting, debt management, and investment strategies to help you rebuild your financial situation over time.Professional Guidance:Consult with financial and legal professionals who have expertise in real estate, taxation, and insolvency issues.

Are there any tax efficient best practices on tearing a unit down, rebuilding a new unit on the same lot?

Current cost for the owner is 4500 a year, which is really good to begin with, they have a 10k deductible and it isn't insured for the full rebuild costs, so that too explains the lower cost.

The strategy I am considering is to tear down the existing structure and rebuild w/ a 4 unit complex.

Tax Records show being taxed at a 359K value and my Fire Policy quote indicated a 525K rebuild cost.

We're debating with weather to rebuild or to sell the house as is. 

It sounds to me like the cost of rehabbing this house or rebuilding this house; you could end up pricing yourself out of the market.

I do Complete Rehab, water fire, mold damage restoration, mold inspections, (re-builds) drywall, painting, post construction cleaning, carpet installtion and tearouts, new flooring, property management, I have 11 certifications, 2 are Master Certifications.

I cannot afford the expense of rebuilding the water pipes in future .