They are excellent loans to get, but you are limited to I believe 10 outstanding loans maximum and they get harder to qualify for as you get more I believe. 

Be sure to let me know if I’m wrong about not qualifying for a tax break because it’s a rental.

Based upon this fact pattern, do we qualify for Real Estate Professional status?

Because flips are considered inventory (not capital assets), profits will be taxed as ordinary income rather than qualifying for long-term capital gains treatment.For tax filing:Report expenses like construction costs, permits, and interest as part of your cost of goods sold (COGS)—these won’t be deductible until the property is sold.Since no revenue is expected in 2024, your S-corp may show a loss, but that loss won’t reduce personal taxable income until the sale occurs.Each partner will receive a Schedule K-1 every year, including 2024 and beyond, as long as the S-corp remains active.Unlike an LLC, S-corp shareholders do not pay self-employment tax on their share of profits.

Since flip properties are treated as inventory rather than investments, they don’t qualify for capital gains treatment.

But to add, If you hold for at least two years before selling (and still qualify under the primary residence exemption), you might avoid capital gains taxes.

Alternatives for Capital Gains ReductionSince capital gains are taxed lower than W-2 income, these strategies may offer better tax relief:Opportunity Zones – Defer and reduce gains by reinvesting in Qualified Opportunity Funds.Gifting Appreciated Stocks – Transfer to lower-income family members for potential 0% capital gains tax.MLPs (Master Limited Partnerships) – Tax-advantaged investments that generate passive income with deferred tax liability.Tax-Loss Harvesting – Sell underperforming assets to offset gains.If reducing W-2 taxes is your priority, STRs are a great move.

If so, she qualifies for a section 121 exclusion, which means she is selling her primary residence and won't owe capital gains tax on up to 250k in growth over her basis (It wouldn't be an issue if it sells for 250k). 

I recommend discussing your strategy & financing with a lender to make sure you could qualify for both FHA and then an investment property loan.

Buying your first rental can feel overwhelming, but once you get through the first one, everything gets easier.Here are a few ways to get started:House Hack with an FHA or VA Loan – If you’re open to living in the property, you can buy a duplex, triplex, or fourplex with as little as 3.5% down (FHA) or 0% down (VA if you qualify).