Myself and my sons reside in the home.

The full-time owners had an outsized voice on the condo board and did not like the fact the we and a couple of other owners were renting our places to "transient" residents.

I know you said conventional loan but is this primary residence purchase? 

I know the first $250k is tax exempt on a primary residence. 

If the bathroom revovation was done to the portion of the property that he is occupying as his personal residence, then that renovation cost is not deductible at all. 

My questions are:ABOUT 1013 exchange : I understand that I have to exchange a two family for a two family, but if I buy a two family and make one of the apartments my primary residence, will I still have to pay capital gain taxes if I sell in let's say in 5 years? 

Similarly, newer buildings might only need cosmetic touch ups to bring them up to modern standards.This isn’t single-family residence where you can estimate an ARV (good points by @Michael Le), stick your thumb in the air and estimate.

Locking in your profits of your primary residence may sound appealing. 

The kink in all of this is that I have $16k balance on a 401k loan that I am still repaying, that I took out to buy my primary residence two years ago.

Also be sure to inspect prior to lease renewal in case you need to use it as leverage for correcting any issues before agreeing to renew or find something that merits non-renewal.sample letter:Tenant, Thanks for being a valued resident over the past XXXX!