There are numerous BP podcasts that have harped on this exact point.

I don't buy lender's explanation about property being investment property.

@James Marszalek thanks for the explanation.

@Chris Martin  This is a MUCH better explanation than the one I gave  :)@Christian Hansen See Chris's explanation of when you can file.  

If the borrower has 5 pages of hardship explanation, that one goes into the negotiator's "read later" stack of papers .Write N/A in EVERY blank that is "not applicable."

I am new to vacation rentals but have numerous long term rentals.  

I think alot of the answer depends on your intent when purchasing the original property and numerous other factors as outlined in this article;Forbes Article on Cap Gains vs IncomeI would recommend getting a trusted tax advisor involved sooner rather than later. 

Amit, I have done numerous frame work.

You have to be careful about this throughout the City of Indianapolis, but I have seen it specifically in this neighborhood on numerous occasions.

Here's another suggestion that I have forgot to mention numerous times previously.