Markets like Indianapolis:  state of IN has a 2% tax rate and investors get no homestead exemption;  That means on a $350,000 home you're paying assessed value tax around $6000/year or $500/month;  Add $200/month what you should figure as short & long term capital repairs;   $175/month MGMT:   $75/month lease fee assuming tenant stays 2 years;  $25/month HOA minimum, 1 month loss of rent assuming vacancy during turnover every 2 years = $80, and you are at $1055/month:  This is based on a nice neighborhood/class A/B in indy Suburbs;  On a 4/2 1/2  SFR you'll pull $2000-2100/month rent,  so you're left with $1000 to cover your P&I and profit.

Likely they will not count STR income but traditional rental values, so there is a loss there. 

and if so, what percentage could we claim as a loss? 

Or should I even just cut my losses and sell.

.$78k in passive losses”—those repair costs aren’t currently deductible, get added to the basis.78k is passive loss, rehab cost 200k+, also loss carried from previous yeargonna find a way to qualify

If they want to sell and get their money back they’re out $75k plus real losses. 

After you qualify for REPS, old losses remain locked.

Once and if you get a judgment, you will still have to perfect it by collecting on it.Based on the information you provided about the contractor’s financial condition, collection seems unlikely.Sometimes it is best to take a loss and gain by the lessons it brings.

We met all non-passive requirements and can provide proof to show that our projected annual materially-active involvement is at least 500 for 2023.We met with our CPA and he brought to our attention that we had a loss of -$107k.

@Kyle FronckowiakWeight the vacancy loss of raising the rent 800 per month with the time it would take to get a new equally as good tenant.