A lot depends on how well the house was rehabbed and if preventative maintenance is done ...preventative termite treatments or making sure the soil is graded and gutters are clear and hvac/A/C serviced regularly.

If it is a normal 70/30 leveraged property, you may end up subject to tax on 70% of your returns anyways - so cost benefit, is that 30% tax free portion worth the high tax rates paid and additional filing fees to get tax free treatment on the 30%?

It overrides the 1231 treatment you are arriving at. 

Hello – I'm looking for confirmation of understanding/ advice relating to transferring property into LLC and treatment from a tax perspectiveMy parents completed a 1031 exchange over 2 years in their own names – they file a joint tax return.

Compared to pre-TCJA rules, there is no material change in the tax treatment of a building involved in a like-kind exchange, where a cost segregation study has been performed.

This is separate from the tax treatment of the insurance proceeds.Your CPA's suggestion of not doing a partial disposition and instead offsetting the insurance proceeds with the cost of the new roof might be less favorable in terms of tax planning.

The key factor is ensuring the property qualifies for favorable tax treatment by adhering to IRS rules regarding short-term rentals and material participation.For the 7-day rule, the IRS requires that:The average guest stay must be seven days or less for the property to qualify as a short-term rental.If the average stay is 30 days or less, you must provide substantial services similar to what hotels offer, such as daily cleaning or concierge services.Regarding material participation, to further classify the income as non-passive, you must meet one of the following criteria:You spend more than 500 hours actively managing the rental in a year.You manage the business yourself and spend at least 100 hours, with your involvement exceeding that of any other person involved in the rental.Please note there are actually 7 ways to qualify, the above two are the most common.

However, the exact treatment may depend on your accounting method (cash vs. accrual basis), but most individual taxpayers use the cash method, meaning they typically report expenses when paid.

You should be able to see this on your return, both treatment and election. 

The specific tax treatment would depend on how the preferred equity is structured in the syndication and whether it qualifies as debt-like equity or retains characteristics of a typical equity investment.