The regulation you cite is called "26 CFR § 1.168(i)-4 - Changes in use" and from what I see applies to personal use property (e.g. a person's residence) and tax-exempt entities converting to taxable entities.

The latest tax benefits (cost segregation, Tangible Property Regulations and more) can add as much as 6-10% of your property purchase price in after-tax cash-flow to your bank account.

And they'll guide you through the maze of regulations.

My first questions would be regarding zoning regulations...are they vacation rental friendly (i.e. area restrictions, HOA restrictions, etc.).

And, learn how to leverage the latest tax regulations that apply to the type of property you will be purchasing, before you purchase.

@Stevan FranetaWhile Sec. 179 does apply to residential, HVAC is subject to the tangible property regulations and is generally a 27.5 yr property not subject to Sec 179. 

There is some upside (low turnover, convert multiple units into one to create a new fair market regulated rent, etc.)

I was hoping to be able to find a way to prove it to them but I understand their regulations and looking out to protect against mortgage fraud.  

Such re-routing potentially creates problems with the state real estate regulations, with the IRS, with the state tax authorities, and/or with professional insurance. 

What sort of regulation is there on overnight rentals?