So, the losses will be carried over year over year as Passive Allowed Losses (PAL).  

@Amit Shukla the STR loophole allows you to take losses from passive investments and deduct them against active income by material participating in your property. 

It is always best practice to use the state regulated forms, although it is up to your Broker on what forms they allow agents to use. 

Here are some considerations and tips to help you make the most of your turnkey investment strategy:Pros of Turnkey Properties:Ready for Rental: After refurbishment, turnkey homes are usually ready for occupancy right away, saving you the time and hassle of doing repairs and improvements.Professional Management: A lot of turnkey companies provide property management services, taking care of tenant selection, rent collecting, upkeep, and other daily tasks on your behalf.Passive Income: Investing in a turnkey property allows you to immediately begin earning rental income without having to take on major maintenance or remodeling tasks.Tips for Investing in Turnkey Properties:Take some time investigating turnkey suppliers in-depth and select reliable businesses who have a proven track record of effective property management and satisfied clients.Make sure you have done your research about the property, its surroundings, the nature of the rental market, and its potential for long-term income flow.Analyze the financials of the turnkey property.Even though turnkey homes can generate rental revenue right now, think about your long-term investing objectives and plan.

An inspection contingency allows the buyer to exit the deal if material defects are found. 

The the lowest downpayment FHA loans allow is 3.5%), so I would need  $ 7,000 cash not including closing cost.  

You could also buy the property as-is, and start the eviction process as soon as your state laws allow.

I have to go before a town board to petition this.All the surrounding houses are sfh, and the building commissioner was uncertain if they would allow it.  

You then apply the same ratio of debt financing to all allowable deductions to reduce the taxable amount.  

There are probably tens, if not hundreds, of thousands jurisdictions where they are allowed.