I have a client formed LLC in 2019 as partnership taking out hard money loan flipping single family residence property

[Yvonne]

I have a client formed LLC in 2019 as partnership taking out hard money loan flipping single family property. They bought the property in 2019. They were fixing it for more than a year. They are going to sell it soon in 2021. The property is held for more than 1 year now.

My question is how to avoid to pay the taxes for ordinary income when they sell it in 2021 and just pay the capital gain tax 15%. They both have regular w-2 employee jobs and not materially participating the flipping business. Where should I report the on the form 1065? What kind of expenses can I deduct before the property get sold in 2019 and 2020? 

Should I report it on the form 8825? But the property is not ready to rent out yet. I know I can not depreciated it . So the fair rental day is zero. Can I still deduct the mortgage interest and property tax and insurance? 

Should I not report on the form 8825, and deduct hard money loan interest, property tax and insurance just on the form 1065? Is this considered as operating business expenses? So when they sell the property, it will be considered as inventory and taxed at ordinary income and collect self-employed tax too? 

Or should I not deduct mortgage interest at all till the property get sold? 

Thank you for your help.