The idea of closing the 1031 loophole has been proposed in Congress and the Senate for decades.

I'm sorry Ed, but what you proposing doesn't make sense and is now allowed.

There are openings in the upper west exterior walls where electrical conduit was removed.10.The stucco in these areas has not been repaired to prevent moisture penetration and deterioration.11.The front unit has issues flushing the toilet, which was confirmed with a tenant, so camera scoping of the drain pipes was performed that revealed damages and blockages in the pipes.12.Deferred maintenance on multiple items: cracks around windows and pipes, gas pipes are not supported, pilot lights in heater units were not lit, a water heater unit has no ventilation.I hired a plumber to scope the pipes (please see his report in the invoice attached and photos); a roofing company was hired to assess the damage to the roof above the middle unit only (please see proposed work sheet); a general contractor has inspected the settlement of the wall in the second unit due to the damaged frame.

I am unsure of how to structure this proposal.

For reference, Bernie Sanders tax plan proposed raising capital gains tax rates to an effective 64.2%, which would be roughly 50% higher than any other country on earth and would absolutely destroy the American economy. 

Finally, there will be federal taxes beyond beyond income tax, since you are considered running a business, you'll be liable for self-employment taxes related to the business income from your nightly rental business.The proposed legislation limits the total number of nights to 90 per year (for units that are not owner occupied, like a home).

Would I propose a  6-8% return on their investment within a year and/or 20% of the price that the home sells for if it is ever sold.

Having the repairs approved and assessed should make the out going owner supply the money for repairs, however if they are only proposed and not accepted they will not be bound to pay for anything other then what is in your purchase agreement. 

I can't say for Ohio but going through this NJ we got an appraisal for the date of death and one for the proposed sale.

If the seller is even mildly agreeable, what would be the best way to propose this?