After the first test showing positive, the owner reduced the price to the amount of his debt, just to get out of the property.

Keep in mind that depreciation deductions also reduce your property's basis.Question 2 - No, as long as you live in the property for 2 of the past 5 years, you qualify for the entire $250,000 ($500,000 if you're married) capital gains exclusion.

If you hire someone, you can take that as an expense and it reduces your taxes.

@Max Tanenbaum,Did you send with your offer documentation showing why the offer is so much reduced from their asking price?

I have heard of storage/garage or laundry angles for revenue (if you have these to charge for), but for most 2-4 unit owners, the early story is probably not a quick top line growth story (but a slow one as the market will usually incrementally justify increases) but you can improve the bottom line (alot) as a really diligent hands on landlord in my opinion.... so your costs can come down, be it for DIY repairs, painting, mowing, management, etc)... and this in turn helps with happy tenants who will stay (reducing costly vacancies)...

Amend the past 3 years (2012, 2013, 2014), this would disallow the change in accounting method, and claim the depreciation that should have been taken during those 3 years, and reduce the basis for the additional depreciation that was allowable3. 

It can be harder in colder parts of the country but not impossible.Just last week I found 2 tenants- one for a C property and a 2yr lease for an A property.I did reduce rent by $50 and scheduled 3 showings at the same time for the C prop.

Not the best scenario, but they deal with your creditors, reducing the rates, and you will be paid off in 5 years or less.

Because they want to sign for 5 years, which will reduce vacancy costs, I should probably reduce the annual rent increases but I have no rule of thumb to go by. 

Why would a savvy RE investor in his final days write a 5 year lease for one property that reduces rental income and/or the ability to sell for his sole heir?