Then you sell your rental at a $200k loss.). 

We haven't gotten into the world of short term rentals yet, so I'm at a loss at what is allowed, what isn't, where to look - she is going to check with her mortgage and insurance.

I have literally lost thousands of dollars - so much passive activity loss that can pushed forward on my taxes.

So now instead of getting the deed, selling the property and helping to recover the losses from all of the redemptions, I end up still losing money on the liens that do not redeem.

Also any losses from Y will flow into Parent Holding X for tax purposes and such losses will be adjusted towards active income.7) Use a revocable trust to replace us in the ownership chain to avoid probate issues and easy inheritance to our kids.

Even though I don't think there's a way to get out of this without taking some sort of loss.    

@Peter Mckernan @Mark Frattini@Allen Tracy @Katie L. also looking for a RE-savvy CPA in California who can work with me to execute the STR strategy to offset W2 income with losses from a cost seg study I'm conducting.

If I go with the 5900 policy I will be operating at a loss and I will be forced to sell the house. 

Also, you are buying property at a loss from Mom.

I've gotten Proper insurance in Palm Bay for building, liability, loss of income, etc. for around $2800 WITHOUT wind and paired that with a wind-only policy for also around $2500.