Renting duplex to sons

That said, upon moving the tenant out, there was about $20,000 in reno's, not including my husbands labor, and remained empty (and still is) for 5 plus months. 

The $20K for reno's adds to its basis. no value is assigned to your husband's labor.

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We are now considering renting it to our other son.  I want to ensure we do everything correctly.  Do we claim rental income/loss for the portion of the year that the other tenant was there? 

I would treat each unit separately. here are the rules.

1) any day rented to anyone at less than Fair Rental Value is a personal use day

2) was personal use (see 1) during the year more than the greater of a)14 days or 2) 10% of rental days excluding personal use days 

3) if 2) is yes, was property rented less than 15 days excluding personal use days

4) if 3 is yes, you treat it as a personal residence. do not report rental income or expenses for the year except that mortgage interest and taxes nay be taken as a deduction on schedule A subject to the various limitations for each

5) if 3 is no, prorate expenses between personal and rental use. rental portion of interest and taxes is not limited to rental income. other rental expenses are limited to remaining gross income and are subject to ordering rules  

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Should we even be renting out to our kids? 

That's a personal decision.

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Do we claim that property as principal residence if we plan to sell our current property within the year or two? 

No. it's not a principal residence because apparent you won't have actually lived in it for any 2 out of 5 years before sale

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Lastly, we might sell the property at some point to one of the sons if interested. 

There may be depreciation recapture. depends on the sales price vs the adjusted tax basis on date of sale. sale at a loss would be personal nondeductible.

much more complicated if you sell but at less than fair value. then you have part sale part gift which might require filing a gift tax return. There still could be depreciation recapture on your part but any part you don't recapture becomes his to recapture subject to the rules at that time. Because this event will be in the future consult a tax advisor at such time   

Thank you for any suggestions or redirect.

Trudy