In a 1031 exchange, would I be able to apportion the entire amount of the proceeds toward the investment (rental) unit so that I can qualify for a full exchange and effectively defer 100% of the gain?

Otherwise, qualifying as a real estate professional will be for not because you won't be able to change the losses from passive to active (which goes against other active income) 

Had a good bit of interest, but no one who actually has enough income and credit and job history to qualify.

If the Tenant Buyer walks away from the deal I get to keep his Option payment, since it is non-refundable and I sell to another Tenant Buyer and get another Option Payment usually about $20k to $25k.I encourage buyers to get qualified for financing, give them a mortgage broker contact and to plan their lifestyle to be able to get a loan to exercise the Option.

My wife is a stay-at-home mom but handles leasing, tenant issues, repairs—basically runs the rentals.We’re exploring if she can qualify for Real Estate Professional Status to offset my W2 income.

They might qualify if they lived there 2 of the past 5 years, but having it in an S-Corp complicates things.

That kind of income with decent credit you should qualify for way more.

Quote from @Adam Wachter: My wife is a realtor and works full time in that role, so she qualifies as a REP. 

When filing jointly, if one spouse qualifies as a Real Estate Professional and materially participates, the rental activity as a whole can be treated as non-passive for the joint return.

Once you pass that point, it’ll have been more than three years since you lived there, and you’ll no longer qualify for the exclusion.If you sell before March 2026, you can likely exclude up to $250k/$500k of gain from federal taxes.