I would tend to agree with the other CPAs typically.The 500-hour test is one of seven material participation tests used by the IRS to determine if a taxpayer is actively involved in a trade, business, or rental activity. 

Stick to areas you know well; this familiarity can greatly reduce risk and boost your confidence when making purchasing decisions. 2.

Consider investing as a partner or lender with someone in an area such as the Rust Belt that does produce cash flow - but keep in mind that the long-term trade off will likely be less appreciation for that investment.

Making big investment decisions can bring reservations- I would love to connect and review strategies! 

I would be happy just throwing my money into index funds if that makes the most sense, I'm just not well educated in the area of passive income enough to feel confident in any decision. 

I kind of traded my 20s for the freedom of not working that started at 41.

@Joey Chalhoub This decision should be read narrowly to address statutory frameworks such as MN where state law permits it to take property to satisfy real estate taxes/penalties/interest, sell it, and keep any surplus outright.

Together, the property nets us roughly $1,400/month after expenses.Equity Split: My partner owns 60%, and I own 40%.I'm exploring ways to take out my equity without disrupting this deal, as I feel this isn't the best financial decision for me right now.

Again even if you have great credit as you start to add more credit cards, mortgages, auto loans to your credit you can also be viewed as "High risk" due to Excessive trade lines in credit or higher DTI - debt to income ratios. 

Consulting a tax professional or financial advisor familiar with these rules would be a wise step before making any decisions.