I have enough equity in the current house where I can do a 40% down on the bigger house. 

It might not make the investment efforts worthless if the superior liens exceed the equity value of the real property. 

If your new to flipping the investor will probably want less favorable terms for you (such as higher interest rate and points).

The example they give usually is that somebody has no equity and is in foreclosure so they Quit claim a deed to you, Then you contact the IRS to have the lien removed or released as long as you  can show there is no substantial equity.My question is this : Will the IRS work with you as a buyer of a property that has an IRS lien on it if you have NOT been given a deed to it  and don't own it yet?

I want to be able to improve the property somehow, create equity, and a place that someone is proud to rent.Solid fundamentals.

I don't have money for a down payment and there are improvements that need to be made to the home that I want to use the equity for, so I thought maybe apply for a HELOC or home equity loan first since I will own the property once we sign the contract and then use some of that money towards the downpayment to pay off the seller and then I will be making lower payments.

For example, if your coming out of a new construction site with more equity than it cost to build then you can guess that we are still in the growth section of our market.

These plans were already here to get my 20% equity, refinance, and reuse the FHA program. 

I explained at that time that i understood if they needed to go that route, but I explained that I couldn't maintain the rent that far below market.Fast forward to now and as more time goes on, they are growing on me as neighbors and so not only would i not want the wrath of the neighborhood if they are forced to move, i also would like to keep tenants that i know are great neighbors while i reside there.So all that being said, if you were in my shoes would you take an income hit and not increase the rent or only increase it by $75 or so in favor of maintaining a quality life with good neighbors?

I now owe $450K on the loan.If I refinance the property now valued at $1.7M and we can pull out $750K in equity with the refi, what are the tax implications?