Typically real estate is passive and the IRS didn't issue guidance specific to rentals with regard to the new 20% passthrough , nor does it plan to. 

It is not entirely clear, based on the IRS regulations.  

Have you done any research on this property to check on outstanding encumbrances such as an IRS lien or any other special assessments?

Is the issue with the IRS only that if you trade interest income for a higher sales price you have lower taxed capital gains vs. regular income from interest?

This could have a large favorable impact on your models output depending on the tangible, depreciable holdings of this "model" S corp (aka rental properties, etc).As I mentioned before, there are many other factors that could come into play, so in putting this model into practice it would wise to consult a CPA, especially with the many uncertainties surrounding the treatment of these reform items.One of the major vague items I am curious to see play out is the IRS treatment of the wages used in your model.

Since you mentioned Murrieta, I 'll hop on with my 2 cents. 

And I'd have to find other IRS write-offs to cover the annual rental profits.Some complicating variables to note: Since it's a beach house, the value has spiked far faster than the estimated worth of the other homes, a reality that surely will continue, since the coastline is shrinking, not growing.

If your attorney recommends an extra liability shield, besides E&O, then form a 1-person LLC but treat it as disregarded for the IRS purposes.

I would say make sure you understand the tax situation---not a cpa but if you use it more than 14 days personally  its not classified as an investment property according to the IRS and your expenses, including mortgage interest if you have a loan, aren't deductible.

If you rather read the Regs yourself (don't know why you would), here is the link:https://www.irs.gov/pub/irs-drop/reg-115420-18.pdfBelow are our insights as to what the Regulations say:BackgroundThe Tax Cuts and Jobs Act enacted Code sections 1400Z-1, which allows for designation of certain areas as Qualified Opportunity Zones, and 1400Z-2, which provides for certain tax benefits for investing in certain Qualified Opportunity Zones.