It is not worth the energy and expense to try to enforce the lease, the only leverage you have is harming their credit, which they don't care about right after a home purchase. 

When you instead focus on positive outcomes for your future, you reduce anxiety and are able to better focus on desirable results.

Unfortunately on a development you need to do a lot of the work up front to reduce your costs. 

I agree and the feds actually already started reducing bond buying in November.

As long as you have a day job, and do R/E on the side, the if your income exceeds $100K, your allowable loss slowly reduces and by the time you hit $150K, the current year loss is zero.

He does own the property free and clear just FYI, but I wanted to put this out to the group to see if anyone has run into a situation like this before, and if anyone has any suggestions on a way to structure the deal in a way that could reduce the seller's taxable gains so we can put an agreement together.

@Ellen Bonner, @Bill Brandt is correct (capitals and all :)Your basis carries forward into the new property and your basis is reduced by depreciation taken. 

@Patrick Thomas Dickinson The stress test is simply running my same evaluation numbers using 10% less in rents (reduce assumed market rent by 10%).

Amazing how few actually do it.You sound like you have plenty of courage and energy.

Energy Efficient Deductions (179D) – Your property may be eligible for this deduction if the property uses energy efficient assets such as Windows, HVAC, lights, roofs, etc. and is 4+ stories.2.