Buy 2nd house, IRS debt, 1099 wage, best money allocation, advice needed.

[David Alejandro Hernàndez]

My name is David, I'm 28 years old, working as an independent contractor. I currently earn about $7,000 per month, working 50-55 hours a week at $34/hour. I'm also in school to advance in my field, which could increase my hourly rate to $80 after two more years.

I recently bought my first house, a 3-bedroom, 2-bathroom, 1500 square foot home. It has a potential to convert an under-truss lanai (sunroom) into an additional bedroom and bathroom, adding 253 square feet to the house. The current value of the home is $330,000, and it should increase to $365,000 after the conversion. My mortgage is $2,650 per month at a 7.99% interest rate. I rent out the master bedroom, bathroom, and an independent kitchen area with its own entrance for $1,200 per month. (I live on the other side of the house, 2 bedroom and 1 bathroom).

I have a $20,000 debt to the IRS, which I am paying off at $381 per month due to high taxes declared two years in a row to qualify for a mortgage.

My goal is to build a portfolio of properties that pay for themselves. I need advice on the best allocation of my money and how to achieve this.

1. Should I pay off the IRS debt first and then save for a second house?
2. Should I do both simultaneously?
3. For buying a second house, should I declare high taxes again or save for a 20% down payment to qualify for a loan based on my active income, without needing tax returns?

Other details: I live, and work and the home I purchased is in Cape Coral, Florida. Home prices have dropped since last year and are still going down. There are many homes for sale right now. I'm not sure if prices have hit their lowest point yet, but they have come down a lot from when they were very high last year.

Thanks for the help in advance.