Make sure you account for the cost of digging out and building that retaining wall. 

@Brian Eastman, here's the language from 4975(c)(1):"(D) transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a plan;(E) act by a disqualified person who is a fiduciary whereby he deals with the income or assets of a plan in his own interest or for his own account; or(F) receipt of any consideration for his own personal account by any disqualified person who is a fiduciary from any party dealing with the plan in connection with a transaction involving the income or assets of the plan."

Remaining tax would be total taxable gain less depreciation recapture less PAL carryforward (from "unused" depreciation expense)Alternatively, could I not depreciate the property (which i did not do for the past 2 years in error and need to file amendments) and file a Form 3115 (application for change in accounting method) in the year in which I sell the property to catch up and claim all the the missing depreciation all at once?

If you do not have an accountant now is a good time to get one-a tax guy/gal who knows REI.

If the owners do not have an impound account for taxes/insurance are you also making these payments; again what %?

@Cheri Crane and Account Closed, did either of you guys try to use the Happy Home Investor site?

But I'm an accountant, not an attorney.

Account Closed I'm not sure of the prices in your market, but might not be a bad idea to keep renting it but take out a HELOC on it and do the BRRRR strategy to pick up some more rentals. 

Originally posted by Account Closed:Originally posted by @Asher Carr:Hi everyone,So I understand that owner financing works best if the home is free and clear.

Account Closed I think that is very doable.