Presuming the loan is for business any interest you pay is a tax deduction. 

Essentially, this proposition allows seniors, victims of natural disasters, and disabled individuals the ability to transfer their property tax basis anywhere in the state.

There are some questions I have if anyone is willing to answer them, like…when starting my airbnb arbitrage business, what is tax deductible?

I was under the impression that any change in loan guarantor would NOT allow the loan guarantee to follow.   

The step-up in basis allows children who inherit property upon their parent’s death to sell the property and avoid paying capital gains tax on its appreciated value.

Allow me to put the money I'd pay for the property into gov't bonds paying roughly what the lease payment would cost, and 3. would give them ~$320K in total lease payments including the offset of capital gains, while it would be equivalent to me purchasing it for cash today at $225K.I know there is an income tax liability on the seller's part for the lease payments, but I don't know their situation to judge the impact of that.I've never done a transaction like this before, so please poke holes in it, or if you have a better option, please let me know.

Current CA property tax laws allow prop 13 tax base (reduced property tax) if property was home of your parents and will be occupied by a child.  

If its close, perhaps they will allow yuo to sign a loan with them to pay off the remaining amount.  

You'd likely run into IRS "personal use" rules that may limit how much of the expenses you can deduct and/or the timing of when those deductions could be realized.See:  https://www.irs.gov/taxtopics/tc41A CPA could explain how it would really work in plain English :)EDIT:  If you had 12 of them, lived in each one for 30 days/year, and rented each out at fair market rent for  300+ days per year, sounds like you'd be golden!

It allows you to claim part of income as passive and part as wages.