I understand for tax purposes that I can only take two-thirds of the expenses related to the house to offset the rental income.

It's crucial to align this decision with the nature of your income sources and their respective tax treatments.

Domicile: WA State (income tax free)Property location (Texas): (income tax free)LT gains + Depreciation recapture ~ $300k on a $500k income property ~effective / average tax rate = 12% for past umpteen yrs (relatively low income, avoiding IRMAA and doing Roth rolls (no 'realized' income, just transferring from tIRA to Roth = vast majority of annual MAGI income)In the end (coming soon, ~17 yrs) ALL remaining estate will go to charities / Charitable Foundation / DAF.

HELOC as a short term debt instrument.

This strategy, if combo with REPS (real estate profession status) basically checkbox on your taxes is key to canceling out full-time W2 employment.If this is new to you... 

I've got a rental that was a new construction in 2022, so no property tax was defined yet (based only on land value.

Engage a debt collector to collect on your behalf3.

If so, would this still cause issue with the S-Corp tax rules?

The slightly confusing part is the Business License Tax Certificate.

Is there anything different in terms of STR tax loophole if I do STR by the rooms?