Now, we need to look at the law.First, pursuant RLTO Section 5-12-140(a), no Chicago rental agreement may provide that the landlord or tenant agrees to waive or forego rights, remedies or obligations provided under this chapter.Second, pursuant to Chicago RLTO Section 5-12-080(d), deductions may be made to a Chicago tenant’s security deposit for only two (2) things: (1) any unpaid rent which has not been validly withheld or deducted pursuant to state or federal law or local ordinance ; (2) a reasonable amount necessary to repair any damages caused to the premises, reasonable wear and tear excluded.Based on a clear reading of RLTO Sections 5-12-080(d)(1) and (2), a Chicago landlord has the right to use a security deposit for unpaid rent and the tenant has that same right.

We are trying to figure if we should sell the existing property we have now, using our respective 250k capital gain exclusion option so we won't pay any cent on capital gain taxes to the government as we have lived on the property for at least two years.

No ego there.I know that you're trying to build a name here on BP however is this just bravado or how you really talk to people who work in government jobs?

The kicker, its current in government 515 where there's assistance on rent and lower taxes on property.

Government restrictions? 

@Thomas Garza The state specific tax laws are different in each state, but on the federal level this is not the case.

The whole "government always gets theirs" thing :-P If I am mistaken, someone please correct me.

., if the house is worth $10,000 and they owe $5000 in back taxes, offer $5000 plus you assume the back taxes. he is a trick not mentioned yet. some, not all, local governments will allow the owner to make a payment arrangement on the back taxes. you simply just have to go into the treasurers office and ask. here in western new york, there is one local that will allow you to put just 25% down and make payments for the next year and a half. you do NOT have to tell the current owner about this. if you structure your deal to include you assuming the back taxes, you are not stating that you will pay them up front, you merely stated that you will assume responsibility for them. check with the local authorities and see if you can work such a deal

Passive losses are governed under IRC 465 and 469.

Have you confirmed with the local government/building department that you will be allowed to complete such a large addition.