He has many real estate clients so he knows real estate issues very well. 

When the other party doesn’t feel needed and they need to sell or buy they’ll be more likely to concede for their delays, issues, etc.

Then pay off the heloc (if #3 is not a issue), because when you find your investment property you can just use the heloc again for the down payment. 

Also, some lenders allow a shorter seasoning period so that should not be an issue. 

Did you live in it the 1 year or 2 for the capital gains issue?

The only issue is that I don't think I can qualify for the loan I would need to do that.

Personally, as a matter of practicality, since they are allowable expenses I THINK the only issue the irs could take is just that its reported wrong, and you'd just apply it the way they want.

So there are two issues here. 

As you noted in your original post if the loan was signed on or before June of 2016, there is no issue. 

I really would like to know if you have ever had to litigate the issue or know of a case, you're relying on for your understanding of how the law would be applied?