I don't believe that any investment is 100% passive.

How to avoid large loses in passive investments?

Guys - I am a limited partner & invest in a multi-family building passively that was sold resulting in passive gains for 2024.

That will put us into the long term capital gains category on the sale. 

I am working toward passive income to live off of.

The only reason you’d consider a 1031 is if you have more than $250k in gains (if single) or $500k in gains (if married.).

Good Morning,I am a former Claims Specialist with the Social Security Administration and currently unemployed homeowner who is looking for guidance on how to gain property management experience here in the Central Coast of California.My wife is the only one working at the moment, so times are tough to say the least.We're looking to rent out a portion of our home in order to save up enough money to purchase our second home (or multi-family unit), rent that out, and begin to expand our portfolio. 

If your goal is passive income, it's not going to be in New Jersey when you factor in cost to purchase, management costs, and rent to price ratio, but what you can get is steady appreciation.

Is there any creative way to avoid/reduce capital gains tax on the sale ?

If you paid under $230k, you’d save $30k in federal capital gains taxes and maybe another $15k or more in state income taxes.