Hey,There's loads of activity in Indianapolis.

We would like for the investment to be treated as active, of course.

First, is the $35k the annual rent from each condo and is that coming from the STR activity report from the seller?

This is because REPS reclassifies rental losses as non-passive, allowing them to fully offset active income.

Have tons of activities? 

One who is active still and recently did a case study write up like this is Don Konipol, the other pops on every now and again and did a BP episode many years ago Aaron Mazzrillo so search those two names and read some threads.A more likely scenario is not what you mentioned as the ever growing note/value deal, at least not as outlined.

Since rental losses are typically passive, the best way to offset W-2 income is through Real Estate Professional Status (REPS) (750+ hours) or Short-Term Rentals (STRs) (100+ hours and more time than anyone else managing the property), which allow real estate losses, including depreciation, to offset active income.A cost segregation study accelerates depreciation, generating large upfront deductions.

The IRS is concerned with the tax return that is reporting the activity of the property. 

If one of you actively manages the property, pursuing Real Estate Professional Status (REPS) could unlock full deductions against W-2 income.

Thank you Hi Eliane, I am in Baltimore and been an active investor since 2004, doing close to 20 BRRRR a year,and I am an agent, let me know if you have any questions.