And then use retirement funds to purchase other passive income producing assets such as trust deeds and shelter that income from taxation. 

We want to maximize her ownership % so that more of the room rental stays in her pocket instead of ours ( we would just pay tax at a much higher rate and end up giving it back to her).

Washington already has one of the most regressive taxation systems in the nation since we raise nearly 40% of revenue through sales taxes.

Factors were a combination of changes in technology, increased automation, consolidation of the auto industry, taxation policies, the need for different kinds of manufacturing space, and the construction of the highway system that eased transportation for commuters.

Like you, I also have a contracting background; was an owner in a design/build company that I helped to start and ran crews for 10 years.One other consideration that hasn't been mentioned yet is the taxation.  

Because you owned the property for more than one year, when you close on the sale, you'll be paying income tax at a rate of 15% for IRS and 5% for IL. 

This introduces UDFI taxation on the profits associated with the borrowed funds.Your father's IRA could JV with other investors on a property, which might be the best option.

If you are looking at properties in the MTL area, better references - w/r to taxation and finance matters - would be:Cohen & Dubé: Legal, Tax & Accounting Strategies for the Canadian Investor;Gray, Douglas: "The Canadian Lanlord's Guiide"; andBoiron & Boiron, "Commercial Real Estate Investing In Canada".The latter is essentially a text book which, despite having commercial in its title, would be a good reference for any investor.

The assessed value by the municipality/province for taxation purposes is frequently divergent from reality, making it quite meaningless as a benchmark.

Simple and avoids double taxation.