I'm trying to plan this out as well as possible to avoid any issues down the road.I've seen the stories where people run into issues meeting this requirement and get scrutiny from the IRS, to me it seems the two biggest red flags might be when they hire a property manager and also when they rarely go out to the property to work on it themselves, always relying on contractors.

I would be happy to have a conversation with you, along with the others who have hopped on this thread.

W-2, 1099, etc.) with passive income/loss from my rentals (STR, LTR).AnswerThere are a few ways, but the most common for real estate investors is to own a rental that 1.) meets the IRS requirements to be considered an STR and 2.) fulfill the material participation requirements.

Hi Heidi - When you sell a property, the IRS requires you to "recapture" the depreciation you’ve taken on that property but by doing a 1031 exchange, you can defer not just capital gains tax but also depreciation recapture tax.If you believe apartment complex is a good investment, with the 1031 exchange process, this can be a beneficial strategy.

Hi Joe - For a single-member LLC, the IRS disregards the LLC as a separate tax entity which means no capital gain impact on transfer.

The IRS will literally bill them for roughly 30% of the difference in what's owed versus what it sold for. 

And the sooner you can offset the income, the more value you get - period (because the money is always worth more today than it will be in the future).The IRS looks at real estate as a passive activity.

We market very differently and have different sales/IR team as well.

IRS Publication 590 is a good resource to examine these items as well. 

Call the IRS and ask them.