@Raphael RamosLending to someone is interest income just like interest income in your checking or savings account - it’s typically taxed at ordinary income ratesI am not sure I understand the question if it’s deductible?

Why does the IRS consider it ordinary income?

And would this mean that my short term rental income becomes ordinary income?

If legal fees or eviction costs arise, they’re also deductible as ordinary and necessary expenses.Keep detailed records of every expense for accurate tax reporting!

The 1245 property (think personal property and bonus depreciation) is recaptured at ordinary tax rates though… so the new property must have an equal amount or more 1245 property. 

I often had clients that didn't understand what it meant to be ordinary and necessary. 

If the carpet is damaged beyond ordinary wear-and-tear, then you deduct from the deposit and charge anything remaining.

He says he usually gets away with $100, with $500 to $1000 being a max he would deposit if it was an extra ordinary deal.

That is not out of the ordinary. 

In the ever-evolving world of real estate, I’m here to transform the ordinary into the extraordinary.