Actually, if it is a personal residence that he has lived in for 2 of the last 5 years, he has a $250,000 exemption if single and a $500,000 exemption if married, if he sold today, while still living.

@Hardeep SinghI think the city has extended the owner occupancy period to two years for rental control exemption.

Make sure your deal is exempt from Dodd-Frank, and that you'll have sufficient equity later on, 5 years isn't very long relying on appreciation in most places.

There are many downsides in doing it via an LLC.As a homeowner, if you live in 1/3, your be exempt from capital gains up to $250K as individual and $500K if married, for the owner part.You're probably taking depreciation, and I don't know how the IRS views your taking depreciation on your owner occupied part if your depreciating it.Then, there are estate issues, where the property is in your name, not an LLC, it could go to your heirs capital gains free.In most states, including CA, there are homestead exemptions, if your file for it.

That right is for 180 days unless it is a homestead, has an agricultural exemption or is a mineral lease only.

you should be able to make a contingent offer based on address price and rents.. the other micro numbers tax's ( which its very smart in that market to make sure because of double tax) and if there is a owner occ exemption can by quite a bit different once you close and blow your numbers.  

There is an exemption under sec 121 where rental/business portions of a residence are not counted if they are shared spaces of the main structure. 

Indiana is great for primary home owners with low property taxes but as an investor, you lose the homestead (homeowner), mortgage and supplemental exemptions.

Murphy" exception exempts you from Fair Housing in most states. 

There's some question about whether or not 90-day notices before the vote will be exempt.