The house probably also has delinquent taxes etc on it as well.

Also, during those 2-3 years you may have to bear to obtain possession, the borrower will probably ignore court orders to pay insurance and property taxes, leaving you out of pocket for those costs.  

You make money and are expected to pay taxes. 

I know this is pretty obvious, but have you tried checking the Montgomery County property tax records or the property tax assessment records online for Silver Spring?

Could use some guidance on how to divide the business, taxes, and payouts.

So I'm wondering if I maybe messed up when it comes to accounting and taxes while rehabbing a house to rent.

Hi Mandeep,The 100 sq. ft. of exclusive landlord space could be utilized in a Business Use of Home deduction on your personal tax return, accounting for 10% of your home expenses.

The purpose of course, is to save for retirement in either a deferred or tax free account. 

Look up local ordinances, laws, taxes, and insurance.

As to your primary residence exemption, if you don't live there and you claim primary residence exemption that would be tax fraud.