In other words - there are plenty of markets in the U.S. right now that don't provide a positive cash flow, but there are investors investing there every day - some markets in CA have properties being outbid by over 100k! 

Your remodeling expenses should get added to your basis as an "improvement" and be depreciated. 

If you spoke to a CPA and didn't get a proper answer is either because of one of the following1) You got a free consultation and they didn't go into the details as that is out of the scope of a free consultation2) You chose a wrong CPA to work withAn appraisal that shows a higher value than what was paid(basis) has no impact on what the new basis is as a result of divorce / transfer.The fact that the property is currently rented means that there must be a basis calculated for determining depreciation.

Most costs incurred prior to that point (assuming it was purchased vacant) will be added to your basis of the property and capitalized, not written off. 

I find it extremely important to know and track your numbers on a consistent basis.

Lenders have mentioned that they have minimums for each loan's underlying asset - either a sqft minimum (750sqft) or an appraisal value ($150k), or both - neither of which those parcels meet on an individual basis. 

If that happened on a regular basis I can see how that logic would be solid.

There are a few other rules that the taxpayer must also satisfy including excess business loss rules, at-risk rules, and basis limitation rules.

While you shouldn't change qualifications this may be the time to test your pet friendliness if you are willing by accepting pets on a case by case basis. 

@Laura Chevalier about your original post, I would simplify it the arrangement   1) the business should be capitalized to the extent that neither of you need to contribute additional funds on a monthly basis   Capitalize with adequate reserves and pay monthly expenses out of the cash flow.