We have a $500k HELOC currently @ 9% we haven't used. we recently renovated and expanded this house so our basis is prob $1.5M so we're hitting the home exclusion cap.Potential to buy a new home in town (kids still need 4 more yrs before going to college) for $1.2M with some work needed and potential to expand a bit.Thinking we should sell home, take $500k tax free, put down 20% on new home so paying more in total mnthly payments but mainly in interest.

In this case, the carrier wouldn't even pick up coverage as Wilful Misconduct will be listed as an exclusion under their E&O and general liability policies. 

They will not accept items such as paper diapers, toys, sanitary napkins, tampon applicators, balls of hair, grease, table scraps (if no garbage disposal), clothing, rags, sand, dirt, newspapers, or similar items.

This is a question I get all the time from investors, and let me start out by saying that I almost exclusively deal with residential Real Estate.

Standard of Practice 1-2The duties imposed by the Code of Ethics encompass all real estate-related activities and transactions whether conducted in person, electronically, or through any other means.The duties the Code of Ethics imposes are applicable whether REALTORS® are acting as agents or in legally recognized non-agency capacities except that any duty imposed exclusively on agents by law or regulation shall not be imposed by this Code of Ethics on REALTORS® acting in non-agency capacities.As used in this Code of Ethics, “client” means the person(s) or entity(ies) with whom a REALTOR® or a REALTOR®’s firm has an agency or legally recognized non-agency relationship; “customer” means a party to a real estate transaction who receives information, services, or benefits but has no contractual relationship with the REALTOR® or the REALTOR®’s firm; “prospect” means a purchaser, seller, tenant, or landlord who is not subject to a representation relationship with the REALTOR® or REALTOR®’s firm; “agent” means a real estate licensee (including brokers and sales associates) acting in an agency relationship as defined by state law or regulation; and “broker” means a real estate licensee (including brokers and sales associates) acting as an agent or in a legally recognized non-agency capacity.

I've worked with investors who exclusively work with rent-by-rooms and while I can't speak to any legal troubles that have come up I can certainly say that location is going to play a large factor in the occupancy.

Our experience underscored the reality that, in a nation where renters abound and multigenerational living is increasingly common, the challenge of overcoming prejudice and exclusion remains paramount.

@Sam Peterson,  I don't think the two approaches are mutually exclusive. 

If so, I'm not sure how you're envisioning qualifying for the parent-child exclusion for property taxes? 

When they ultimately sell their houses, the gain may extend beyond the federal tax law's maximum exclusion amounts on capital gains of $250,000 for single filers and $500,000 for married couples.