I am planning to rent to medical students/residentsI have 4b/2.5ba for 4000 sq ft. 

Yes, there will be capital gains taxes on the value of the new sale minus the value at the time of the inheritance, but you also have an exemption.

LLCs are corporate entities. 506b & 506c are exemptions to registration that we use to raise capital for deals. 

I would like to ask for the official letter from a medical professional, but wanting to tread lightly on this.

If it was a California LLC I believe you can raise money from 10 people, if not then you need to do a sec exemption such as reg d 506c

BP, I own three single family homes that are leased out to medical companies. 2 are assisted living businesses and the third is a transition home clinic.

Profit on the occupied side is exempt up to the 250/500k maximum.  

I do not have any recent activity to refer you to an honest company because of my medical condition keeps me home.  

I have a quote from a reputable off-site builder for $170-240 sq ft. new construction, which would translate to $340-$480k.Coverage A - Dwelling Coverage Limit$301,000Coverage B - Other Structure$30,100Coverage C - Personal Property$20,000Coverage D - Loss of Use$30,100Coverage E - Liability$300,000Coverage F - Medical Payments$2,000Deductible$1,000

If the seller lived in the house for 2 of the previous 5 years, $250k in capital gains is tax free if he is single, and $500k is exempt for those who are married filing jointly.