I guess even if the IRS audits you can show the structure is worth at least 90% of the purchase price.For example if the house cost $800,000 according the the tax bill the structure is worth like 100k but definitely no one will build you a structure for 100k.What do you think?

@Brett Dudley - we have yet to see any court cases for what happens when an STR becomes a LTR, but the IRS looks at facts and circumstances... since you are on public record by posting here that your main concern is the tax benefit, it may not fall in your favor during if you were ever audited. 

You don't apply for it, it is basically you saying, yes - I fit this and then if you get audited the IRS will ask you for proof.

Not only does this help ensure you're taking full advantage of available deductions, but it also provides essential protection in case of an audit.7.

Also possibly if your income was below $150,000.You should ask your CPA how you were able to offset your W-2 income with Rental losses.At the end of the day, you are signing off that the return is correct.If there is an audit down the road and you lose, you can be subject to taxes, penalties and interest.

These records will be essential in substantiating your claim as a real estate professional if you are ever audited by the IRS.Remember that tax laws and regulations can change, so staying up-to-date and working with a tax professional is essential to ensure you're maximizing your tax benefits while following all guidelines.

It was implied that we would likely get audited and they would not be able to defend that claim. 

The IRS will appreciate it when they audit you.

What scares me is what if the CPA I contact also finds it confusing and makes a mistake :OThe only reason I got worried is after I recently heard how one of my teacher's accountant made a mistake and they ended up having to pay fees and penalties and backtaxes for 4 years after IRS audited them.

Unrelated to construction, I am also actively a private IT consultant to PriceWaterhouseCoopers, specializing in big data, cloud technologies, legal compliance, and audit controls (Assurance division), and am an experienced paralegal in the areas of corporate and bankruptcy law.