With the cost of construction that you mentioned, it doesn't seem feasible to make affordable housing in most markets.MF in Portland these days are all up scale and cost 400 a foot to build.. and rent for about 2 to 2500 per 1K sq ft. govmit wants affordable housing they need to open up the tax credit vaults.. also in this market  a new ordinance pass requiring a certain amount of low income units per project there was a rush to get projects through before the ordinance and since that time new projects have dried up to a trickle. 

.   ;-)  No one knows when the next recession will be, or how bad, or what sector(s) will trigger it. 

From what I've read this doesn't usually create tax but you do have to determine what your basis is, as it may or may not be cut and dry as it sounds. 

The third floor has asthma and claims that the sage is triggering her asthma and can’t sleep.

If that is the case, you could trigger Work Comp laws.Do some more digging with your current agent to be sure.Ask if the contractor claims you owe him for medical bills when he fell of of a ladder on your property how your policy will respond. 

I think I am ready to pull the trigger on my first rental property purchase, but I’m looking for some help to see if I have this figured out.

If you are feeling nervous it might be best for you to wait until you are confident enough to pull the trigger on a deal.

That can be put under the countertop in the kitchen, but I'm not a fan of the machines (they don't dry very well).If you are deadest on putting it in the kitchen, I don't think its unheard of, nor do I think its an eyesore, however, I personally wouldn't consider it since you already have it in the basement.

I know this will trigger a taxable event. 

Also, the lender can often call the HELOC due if they believe the underlying equity has dried up.