The appreciation is more or less meaningless because you're not getting rid of the property.These are examples on either end...but figure out your goals and adjust.

I cannot answer as to what the rules/laws are in Denver, but adjusting the rental rate based on number of occupants sounds like a violation of the Fair Housing Act.

This purchase would not be under your name, it would be under the IRA (specifically IRA custodian will take the title for the benefit of your IRA unless you are using Checkbook IRA).

Once you have those in you can take their maintenance, utilities, etc. and adjust them a few different ways to look at how those scenarios impact NOI.

I was turned down by the SSA to get any benefits because they said my wife makes too much money. 

The benefits for you are that you have limited risk if something happens to the property it's less risk for you personally they go after the LLC unless the problem was your negligence and then they can go after you.

They're looking at the short-term benefit of "living for free" for as long as they can. 

I have contacted va benefits and talked to a very unhelpful rep who said I’d need 12 months left or a letter of intent to re-enlist.

The IRS considers debt reduction (when not replaced with additional equity in a new prop) to be the same as cash in terms of its benefit to you, so you would be taxed on the $125k you didn't roll over.If you don't want to carry a mortgage on a new property, you could sell, use $125k to pay off your current loan, and then put in an additional $125k of your own cash to make up the difference, resulting in $325k of equity in the new property/properties, and meeting both the equity and total value rules.So the short answer is YES, it is allowed for you to go from a $325k property to a $200k property while paying off your $125k loan, BUT you will pay taxes on the amount you don't roll into the new property ($125k).

Illinois will get a lot of the benefits, with it being placed so close to the border, but Illinois didn't have to shell out the billions in tax breaks and subsidies that Wisconsin did.