At a 7% annual return, this could grow to $908K after 10 years, providing immediate liquidity and diversification.Alternatively, holding the property could yield $825K net equity after taxes in 10 years, assuming a $900K sale, with the potential to defer taxes via a 1031 exchange if reinvested into another property.

My understanding is profit from lending is considered "taxable income" and is therefore added to your income and subject to your normal tax rate after all deductions, etc.

It’s worth reaching out to your local tax office to explore options.

Is it tax smart? 

Hence the lot on which the house resided was taxed at a 45% discount based on actual value, while the tennis lot was taxed at about 4 times what it should have been by value. 

They lowered the “taxable value” by 40-50% and then raised the tax rate about 35-45% lowering everyone’s taxes that year.

FHA loans require living in the home as your primary residence for 1 year after purchase.

So we finally have a couple of BRRR down but we're trying to figure out the best refinancing after the project is complete.

After wanting them to sign something they never provided it! 

@Eli JermanYes, you should hire a tax professional.