Is there a timing issue with your state's laws? 

If you are carrying a high note and this is indeed your only investment I do not think there is an issue keeping this in your name. 

Issues with the property at closing: low water pressure, aging roof, several lights not working, dated interior, water stain under HVAC unit, damaged decking (burn hole & rotting boards), old appliances, holes in drywallAnticipated cost to renovate:  $22500 (includes roof, repiping from old galvanized pipes, renovation of currently empty unit)  The currently occupied unit is TBD on cost, the tenant has been in place for the past 3 years.   

See what issues they may have and how you can solve it.

I’m attentive to issues quickly and make quality fixes and updates.

Issue is we have the JV partner and they would like to be part of the ownership if we long term hold.

The cheap "cash flow on paper" Class C properties even if renovated will be a huge headache with repairs, tenant issues and won't appreciate enough to make up for my losses.  

Be advised, however, that we did NOT sue our former bank on the basis of discrimination but on issues related directly to their actions against us contrary to our loan agreement. 

The only issue I have with this theory is that the returns %.

@Kevin Luttrell oh, and I think the issue may be that since pretty much all accountants/preparers use a tax software, they follow whatever the software does.