We have been declaring the rent as income on our taxes, and taking a deduction for the real estate taxes on Schedule A.

The lady at trustee is not comfortable of working for me unless I lower my interest to 10% and deduct the interest I received from my principle.

The market will not be 100% as hot as before with big & expensive homes, because interest rates are rising, property/local/state taxes are limited to a $10k deduction AND those homes are just pricey - so people cannot afford the $4500 payments as easily as they could afford the $3700 payments before (P&I, and T&I).

I am aware that the interest is no longer deductible but not sure what other options would be best suited for my financial situation.Thank you for any advice and I look forward to participating the forums.

@Levi Bennett We place DD $ on our contracts.

@Shane Brown Standard issue of documenting costs and deducting from the deposit.

Maybe it was @Levi Bennett who was talking about this.If you can find those posts there is someone who has experience doing this in Charlotte, maybe you can transfer the knowledge to your project and get some good success.

2) Since the mortgage only has one person's name, can we deduct the mortgage interest in LLC's tax return instead of that person's personal tax return? 

I assume you are referencing out of state taxes because you are in CA which shouldn't be a big deal because CA will be higher than everyone else and you can deduct other states taxes from your CA taxes in the form of a credit.

Not sure who you're using but I have a mix of State farm & Foremost policies, State farm for me is about 30-40% less with very similar coverage (deductible is slightly higher & they don't cover flood damage).