Also, curious about what this would mean for future portfolio expansion (e.g. using her name or mine when seeking out financing).

How do they handle future capital improvements?  

We are G&R from Calfornia, passionate about real estate investing for the future.

I would not trust them to follow the rules in future. 

The losses created by the deduction are suspended and can be used in the future.

I hope I can return the favor in value in some way in the future!

You could alternatively hold the property for as long as is necessary to break even but when you consider the time value of money and how money today has a greater value than money in the future "breaking even" in a few years may actually be losing money because you've lost out on opportunities to do things with that money in the meantime as well as you've lost money to inflation. 

There are some key limitations that are important:Passive losses can only offset passive income.Up to $25,000 in passive rental losses may be deducted against non-passive income if the investor actively participates and their modified adjusted gross income is below $100,000.Unused passive losses are carried forward to future tax years.Here’s an IRS article that further discusses the rules: https://www.irs.gov/publications/p9251031 ExchangesThis strategy allows investors to defer capital gains tax when they sell a property if they invest the sale proceeds into a “like-kind” property.

If you are interested, and have any other clients (current or future) that need an builder, send me a message and we can get in touch 

I do want to convert that house to a SRO property in the near future!