Depending on the loan product, you may be able to exclude business debt once the business has paid the debt directly for 12 months.The income and losses related to the operation of the entity will affect the income side of your DTI (like Jay explained) if you own 25% or more of the entity.

After 20+ years in real estate partnerships, here's what actually puts you on the IRS radar (and what doesn't):REAL Red Flags That Matter:The Partner Complaint TriggerDisgruntled partner files Form 8082K-1 disputesPartnership disputes leading to tax filingsReal Impact: Instant IRS attentionSuspicious Loss ClaimsLosses exceeding investmentArtificial basis inflationSudden large losses without economic realityExample: $100K investment claiming $500K lossesRelated Party GamesCircular property flipsBelow-market transfersFamily partnership schemes without substanceWatch Out: IRC §267 and §707(b) violationsDebt Engineering Red FlagsBasis inflation schemesArtificial guarantee arrangementsPartner debt shifts near year-endCritical: IRC §752 compliance matters!

Assuming you are both working and the rentals are long-term, rental losses up to $25,000 can offset W-2 income if your MAGI is under $150,000, with excess losses carried forward.This post does not create a CPA-Client relationship.

The most important thing is to ensure your loan is covered in the event of a loss.  

., mortgage interest, repairs), and up to $25,000 in passive loss deductions if your MAGI is under $150K.

The loss of priceless art, jewelry, autos, memorabilia and watches could often match or exceed the property values.

Once a complete loss mitigation application is received, the servicer must review that application before starting the foreclosure process.""

This would apply to your unit.Your biggest concern with setting the rent should be the near future. 1) Your insurance is guaranteed to go up, probably dramatically.  2) You may get an insurance assessment bill to cover the CA Fair Plan losses.

Be mindful of a gift tax implications if you sell a house for less than FMV.Also be mindful of transactions between related parties when selling at a loss.

I don't mean to throw shade at my fellow Illinois residents, but I'm quite bearish on this state for the long-term.