Years ago when I was in tax practice, it was determined that investing in a real estate limited partnership was considered "like kind" for purposes of a 1031 exchange.  

A tenant's son who smokes, which isn't great, might not financially be worth pursuing (a functioning cash-flow vs an expensive eviction case and loss of rent). 

You can then elect to have your LLC taxed as just about any type of corporate or partnership type w/ the IRS.

Replacement Cost, Actual Cash Value and Functional Value.  

I'm not sure how you'd pass those through without a partnership return, or even if you can do it on a partnership return given that a partnership is supposed to have a profit motive.

When you participate with Section 8 you enter a very unequal partnership with Government.

All such plans will allow for real estate holdings, but have different functional characteristics and you will want to choose the correct platform for your situation and needs.We have many clients taking Minimum Required Distributions from IRA and 401k plans.  

Now, another theory is when rents become an obligation of a servicer or escrow function.

If I agree with their finding, I sign off on it.To note the original condition, I use the abbreviation C & F (clean and functional) on every line item.

They are to be outside all sleeping areas and must be tested yearly using the test function on the detector.