However, take a look at your father's tax return and see how much PAL (Passive Activity Loss) may be built up. 

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.

Just some food for thought.

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.$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

Thank you for your reply that gives me a lot of food for thought!

Depending on your amount you may want to consider a debt fund too as its less work and your money is deployed/paying you interest so you do not have to keep finding deal after deal. just some food for thought