The answer to that question will then determine treatment.

But the debt doesn't get the same preferential treatment as the capital gains. 

If holding for more than 12 months, you get long-term capital gains treatment.

If the taxpayer travels on business in the United States and while at the business destination extends his stay for a vacation, makes a nonbusiness side trip, or has other nonbusiness activities, the proper treatment of the taxpayer's travel expenses depends on how much of the trip was business related.

Using an LP, capital gains treatment are preserved.  

TREATMENT OF DEBT OF OWNERS OF PASSTHROUGH ENTITIES ALLOCATED TO EXPENDITURES FOR CONTRIBUTIONS TO OR PURCHASES OF INTERESTS IN SUCH ENTITIES (DEBT-FINANCED ACQUISITIONS)A.

To illustrate my point, you can ask the same question about a property management company when you question whether or not they give preferential treatment to owners with more properties over owners with just one property.The question is always going to be front and center for property owners and it should be.  

If he wants passive income tax treatment, then his rights have to be limited or it stops being passive.  

You will do much better and get better treatment when in their office.

Plus the risks and costs of termite treatments in Florida, I think in the long run CBS is the easiest to go.Though we only bought one wood-frame and stopped after that :)