The separation of “passive/investment income” from “business income” means that you cannot offset passive losses against business income and vice versa. It normally works against the interests of real estate investors.
Income from the rental of personal property is always treated as regular business income – except in cases where it a “disguised purchase” i.e where the renter is given the option to purchase the property at a greatly reduced price at the end of the lease term.
FYI – you don’t pay SE tax on salary over $100K(94200?) so the idea that real estate moguls benefit from this provision is kind of quaint.