Hi Steven, the best hard money lender will meet the following:1. be willing to work with you (ie lend you the money)2. give you the best rate and terms3. require minimum paper work from you 4. minimum collateral5. they have deep pockets Once you find a good hard money lender, make sure you treat them right.

Can anybody advise me on how to treat this for tax purposes? 

We were not first-time investors but what we learned about asset protection was from investing OOS.The other thing we learned about investing OOS was to treat it as if you were local. 

But it’s not hard to achieve if you treat real estate like your retirement  plan.

My quick research indicates that while there is legal precedent (albeit from 2000) that this would be technically treated as a sale, only the principal and interest paid via seller financing amortization schedule would be taxable.

I agree, oil covers more, ugly if you use it over water based paint though.Well, given this situation, wouldn't you really want to remove the water based paint first, so the wood itself gets treated with the odor removal products?

You either treat it like a business (or hire a professional PM if you are unable) or you will fail. 

But you can still treat it as resulting in Ordinary Income even though it is reported on Schedule E, which lets you properly report in accordance with the tax results it seems you are shooting for under the tax return loophole.If your CPA is looking at switching it between schedules to get that tax result...it sounds like they don't understand the reporting position fully and/or they just don't know how to use their own software to address it.In summary, based on what you are describing for the situation, it should go on Schedule E, with what sounds like the resulting refund of $17k.

Other paperwork in your loan file may be able to conclude how they treated the Occupancy.

Monthly rent + rate increase + probably getting a clearer picture of taxes/insurance would be my guess for that.So I wouldn't completely blame whoever you were working with on that, but if it were my client I would have tried to get a clearer picture of that going into it and either treat it like a 'vacant' or go off of market rents (assuming they are closer to $1200).Good luck!