You're dealing with two parts of the IRS code.1.

Great tools that get updated regularly.I am on the lending side of things and would be happy to hop on a call with you anytime to discuss financial strategies and help answer any questions you may have about nearly any loan product available to help you on your journey, even if they are not products my capital partners offer.We are all here to help you learn and grow.

We had to read some IRS publications when we were uncertain about a few things.

I don’t know how hard th IRS would frown on it but I’m sure it’s done all the time out in farm country. 

The IRS doesn't care which of you is on title.

However, if you sell instead of rebuilding, the IRS may include part of the payout in your taxable gain unless reinvested under the §1033 involuntary conversion rules, which allow you to defer taxes by purchasing a similar property within two years.If the property was your primary residence, you may exclude up to $250K (single) or $500K (married) of gains if you lived there for at least 2 of the last 5 years, likely resulting in no taxes owed.

Will the capital gains in this scenario be considered passive income from an IRS perspective ?

If you're doing STR the first thing you'll need is the VLS license from the state, and that comes with the requirement of taking an 8 hour class.There weren't any of those on the schedule, but I need mine so I talked them into doing one in early February if you want to hop on that one. 

Let me know if you'd like to hop on the phone and chat sometime.

Would be more than happy to hop on a phone call to discuss my experience and give you an overview of the market here in Cincinnati as well.