However, if you materially participate in a business or real estate activity within the LLC, the income may be classified as active, which could allow the losses to offset active income.Ex: Self-Rental: If you rent property to a business you actively run (like a business you own and operate), the rental income can be treated as active under the self-rental rule.Material Participation: Material participation is the key factor here.

I mistakenly posted this in the classified section and wanted to repost in the correct location.

To determine if the expense should be classified as a capital improvement or a deductible repair, the context of the expense is very important.An example is, if an item of expenditure is part of a general plan of modernization, renovation or rehabilitation to equipment or other business property, it typically must be capitalized even though on its own it would be currently deductible.According to IRS Code, expenses that you must capitalize are those that:Materially increase valueSubstantially prolong useful life (including replacement of deteriorating assets)Adapt the property to a new or different useHowever, you are allowed to deduct expenses and fees for routine maintenance and repairs that help keep the property in efficient operating condition.

I've got lawyers who can do this, but per BP's marketing rules you're going to want to post this to the Classifieds section instead of here.

I do wonder, as you mentioned, if their veterinarian has them classified differently.

@Brandon MorganI don't see why you wouldn't classify it as an investment.

You can self-promote under the Classifieds forum.Regarding cash buyers list you are trying to create - just find solid deals and publish them and the buyers will appear.

I am no CPA but my understanding is the same as yours, that the type of mortgage is completely irrelevant to how the IRS classifies the property.

The property is classified as a B/C type of property, with the intention to implement a value-add strategy and it's going at a 6.5% cap rate. 

Additionally, it can help maximize renovations and improvements.38.36% of the total depreciable basis was classified as 5-year class life.