This would be the first land subdivision deal.can you expand on it throwing a wrench into preferred tax treatment?

Providing linens and charging a cleaning fee after checkout doesn’t make the place a hotel.Thus, unless your short-term rental really is a hotel in substance—not just in average stay length—I think 27.5 years is still the correct treatment.

A Recovery Residence that claims to offer services should be classified as a Residential Treatment Center-which includes staff and usually medical personnel. 

In that case, I would probably sell it unless you are passionate about running a rental business and want to do that.Also, I know this is what every CPA says and it is a bit cliche at this point but don’t let the tax tail wag the dog… it’s never advisable to make a business decision primarily off the tax implications, it’s better to determine what makes the most strategic sense and then optimize the tax treatment for that.in your case, it sounds like if taxes were not an issue, you would be better off by selling and having a paid off home in CA and more peace in mind to retire.

When you sell a property at a loss, the tax treatment can be counterintuitive due to how depreciation is handled.

I'm carefully saying "would" because we're not even sure if your sale qualifies for installment sale treatment at all.

I might consider booking a massage or spa treatment through them if it's right there.

That is always my first choice.With that being said, if you decide to rent out the property either as a LTR or STR and convert it into an investment property, the property would also qualify for both the primary residence exemption for the next three years and a 1031 exchange treatment after that.

Since CA does not recognize REPS-based non-passive treatment, STR losses can offset federal W-2 income but may not offset active income for CA purposes.

Also wondering—have you tried any long-lasting water treatments or algae-control tablets that are safe for guests and require less frequent upkeep?