This isn’t/wasn’t a loophole - just tax policy. 

So, we bought the property 2 years ago, based on the valuation of the property considering income from 6 units.The sale deeds (from 2018- 3 sales) I could get from the City and the property tax statements (2023,2024) show that the property is zoned as 411 (apartments).

To maintain your standard of living, your rental income must increase faster than inflation.

My base income is ~$95k per year.

Bonus depreciation will finally be phased out in the 2027 tax year This is well said

Dubai is an amazingly RICH nation, clean streets, great schools, amazing infrastructure, and it's 0% income tax.....

Here's a good breakdown of your options for tax collecting starting Feb 1 based on the new regulations.

Your actual property taxes alone on that will be over $10K a year in 2025 and don't forget about that supplement tax headed your way.I would suggest keeping the others and maybe changing to LTR if that will give you consistent cash flows.  

The 1031 exchange is what allows them to do this without having to pay tax on the gain or depreciation recapture. 

Since you're focusing on affordable markets in the Midwest and South, it’s important to verify rental demand, property taxes, and local landlord laws.