You would get the stepped up basis at the time of their deaths.Assuming you don't want to wait, an installment sale does have the advantage of spreading out the gains. 

I wanted to know if I could pull a HELOC to invest that money into purchasing another property where I could generate passive income.

Although it’s your equity, a HELOC needs to be paid back all the same with interest.Failing to handle this debt properly could hurt you financially and lead to negative consequences; however, handling it successfully can help you manage your expenses as well as lead to positive financial gain down the road.

But in the end, you'll be the one gaining far more knowledge than you can pass on to them.

Hopefully as I continue to grow and gain experience, I'll have something to contribute and give back to this great community.My wife and I are just starting out personally in investing with a BRRRR strategy. 

I get the benefit of passive income without the process of mortgaging a home and he gets the benefits of someone paying his monthly and yearly expenses plus some.

If recourse debt: In foreclosures the property is deemed to be sold for less of  1)FMV or 2) the amount of debt.There will be a debt discharge income on top of capital rate gain, if any.

While I am just doing a single flip right now, it's a big one, and I hope to parlay its gains into several smaller deals to see how much volume I can handle.  

Given that, how can I take advantage from a tax perspective of losses on passive activity from owning rental properties?

I'm very new to real estate and am excited to gain as much knowledge to apply it to this business.