I am NOT a tax expert, but know that your parents can exclude up to $500K from the capital gains on their sale, but DO have to pay on the remaining amount. 

I don't try every faucet or even look under the sink before making an offer (foreclosures excluded of course).

If you have priced your property so low as to have competition to rent the property, I would either consider that a way of getting the best tenant, or raise the price so as to raise the bar and exclude more applicants. 

However, if it is a primary residence there was legislation passed that excludes forgiven debt from income.

A rent of $1225 excludes all who search at the $1200 level despite $1225 likely being in their capacity.

This also means that you can't try and create a loophole around this by saying you'll only allow two people in a two bedroom apartment, or something similar, since that effectively excludes families.As a landlord, however, you are allowed to set reasonable occupancy limits for your units.  

Also, I would not exclude detached garages especially with new Adu options.

If it's to exclude tax on the sale of the property, you need to have the property as your primary residence for 2 years.

If of course, your life and personal situation complies :) I have done this for three years now.For this thought exercise, let's assume the RE professional requirement has been met, and that the net rental income (excluding depreciation) equals $0.Isn't 100K of gross taxable income less 30K of depreciation equal to 70K of taxable income (i.e., 100K-30K=70K)? 

If that boosts occupancy substantially and reduces turnover(each turnover there costs about $3k-$4k in legal, cleaning, painting, lost rent, etc, and that’s excluding the 2 months that the deadbeat got in free rent- so it’s probably closer to $4k-$5k) then I’ll have made a very wise decision.