Since I'm throwing away everything in the house, except a few pieces furniture that are not damaged, do I still need to treat the bedbugs?

Quote from @Ashish Acharya: @Cameron Marmon Since you’re married and living in Texas, a community property state, you have the option to treat your 50/50 LLC as a disregarded entity for federal taxes.

Upon move-in, appliances, cabinets, floors and walls all had built-up grime and residue from your habitation of the home.Infestation of bugs, pests and rodents-There was no attempt to treat the house for pests, as evidenced by the more than 15 spiders we have already seen in the basement, and the live, active wasp nest in the patio fence.Floors, stairways and railings in poor condition-The carpets are stained and smelly.

The more you treat it like a business, the better. 

I opened an  partnership LLC, and I am learning now about taxation it will be treated as a dealer and not as an investment.

In non-community property states a husband/wife LLC is supposed to be treated as a partnership  And transferring from a revocable trust (reported on your 1031) to a partnership LLC (that files it's own tax return) is changing the tax payer. 

It isn't doing "SubTo's" that is illegal, it's how they are done and how they are treated and what your assumptions are and what your unpredictable seller does.Attorneys love these kinds of fights.

You’ll need to treat it like a business—handling tenant management, accounting, legal compliance, property maintenance, and more.That said, when done correctly, it’s a powerful tool for building wealth!

Quote from @David Treat: What comes next in real estate now that Trump is in?

Quote from @Brian Dela Cruz: @John ChapmanTypically, this would be treated as a sale, unless you reinvested the insurance proceeds into another rental property within two years (by either rebuilding or replacing), you can defer the tax under IRC Section 1033.