I agree with Myke--investment properties are terrific on April 15th when we're figuring out our taxes, however when I have a vacancy on November 26th or a tenant who pays late every month, I'm less enthusiastic about my rental properties.
Just another word of advice and it's probably worth what you're paying for it: I don't make financial decisions solely based on how to avoid the tax. If you use this as your major motivator, it can lead you to make the wrong decision. I would suggest you work out your net sheets for each possibility, factor in your goals/pitfalls and make your decision based on that.
Best of luck. I love to work with people who understand that real estate is an investment for the long term (not just a place to live in today).
Coldwell Banker Residential Real Estate