did you file a QSUB election? if not and you wanted QSUB status consult a tax pro for filing a late election. However, in my opinion S-Corps are the worse type of tax entity to hold rental real estate. in non-corporate entities mortgages secured by the real estate generally can be use by the owners to increase their tax basis so losses are allowed. In a S-corp, mortgages do not add to shareholder tax basis. Losses are limited to shareholder tax basis in the S-Corp.
there is also the question of deductibility of expenses for property B, consult a tax professional.
