@Edgar Duarte Selling now under the primary residence exclusion avoids capital gains taxes, allowing you to reinvest the $500K equity in diversified assets like index funds or additional rental properties.

Next we will need to know if the non-conforming unit is legal.

So all of the gain and depreciation recapture are initially still tax deferred.However, like Joe said, the down side is later when sold  you lose the 1031 option. the client will pay tax on all gain and depreciation recaptured from before the 1031 also. 

4) would this also work to defer gains on fix and flips?

.- If you hold a rental until death, you can pass it on with a stepped-up cost basis, limiting captial gains if then sold (limited by inheritance tax limitations).Too many newbies on this site trying to replace their day job income via "passive" real estate investing w/o digging deep enough to understand how it really works.

This risk here far outweighs any small gains in ranking. 

Slow start but hoping to gain momentum.

Quote from @Joe Paasch: I have joined this site to gain important incites, discussions and plans to build a successful portfolio.  

I look forward to learning everything there is to gaining financial freedom and becoming an investor. 

Instead of spending years learning by trial and error, working with a coach or mentor can allow you to accelerate your learning curve, gain confidence, and achieve your goals faster.