Currently, the principal, interest, taxes, and insurance (PITI) amount to $3,329 monthly.

Not a real estate professional for tax purposes, but currently have experience with 1 other rental. 

Want to sell the cheaper lot but not sure how to figure the taxes. 

I'd recommend getting a free cost/benefit analysis quote from a cost seg company to determine if the tax benefits would outweigh the costs.

More details:Mortgage (principal + interest): $2930/moProperty taxes: $15K/yearHome insurance: ~$1K/yrCost of home ownership/month: $4280/yr (not counting for any tax deductions related to the interest and property tax)If I account for $20K of interest and $10K of property taxes as an income deduction, then I can reduce the cost by ($30K x 35%) divided by 12 = $875 per month = $3400/mo cost of owning the houseRental income after 35% federal income tax + 9.3% state income tax = $2618/month (!!)

If so, is there certain steps to take to qualify for the tax advantages?

To clarify @Jason Wray's response, monies pulled out of an exchange are called "boot" and you pay taxes on them. 

There are also additional costs of operating and maintaining an LLC, like separate bank accounts, annual report filings, tax filings, etc.2.

With the high property tax and about 10k of work needed on the home.

My questions are: Are they any implications (tax or otherwise) if after the funds are paid into the business account and my friend writes a check to their personal account from the LLC to get his money out?