@Benjamin WeinhartMy experience on this tax forum tells me that highly technical discussions of the Code/Regs nuances are not well suited for this platform.That said, my 2 cents is that this issue is a matter of interpretation.

I know 50 percent seems extreme, but considering how high things have come since 2019 with Covid demand etc, I don’t think we need an apocalyptic event to see 50 percent revenue haircuts, just a typical recession will likely do considering far we have risen. it seems like a 30 percent drop in rents will wipe away profit and anything beyond you will have to come out of pocket for assuming in interpretations correctly.if you have to go negative how long can you sustain payments?

A realtor friend shared his interpretation. 

Do you interpret the law differently?

Find the definition of “primary residence” in law, and define it for me… They would not or could not and only pointed out how within the city code, for that section specifically that the director “has interpreted” primary residence to mean one’s normal place of return… again, thats not even a definition.

@andre gala here's a link to the Zoneomics report on relevant regulations in Wheat Ridge.https://www.zoneomics.com/code/wheat-ridge-CO/chapter_4#PRDI'm not attorney or agent, so I'll leave it to you to interpret.

Which portion of the tax code do they reference / how are they interpreting it?

Sounds like they are having a wrong interpretation of active/passive.

You don't say what you mean by 'use up' is that to live on, to distribute and invest, or some other interpretation? 

I'm spending more time trying to understand and interpret all of the variables and inputs than I am in analyzing the deals I have on my desk.