I thought it would be better to throw a new post here about the rent deduction question.

Similar green energy investments could be considered if you can make the numbers work (credits on some types of low income housing can be north of 50%).Depending on how long these properties have been held, they could consider implementing cost segregation studies via a change in accounting method to accelerate some depreciation.The operating proceeds could be re-deployed into new properties where cost segregation is an option to accelerate depreciation to offset proceeds.If the properties are low basis and we are not maximizing the 199A deduction, maybe considering an S-Corp structure for management to be able to participate in retirement plans and also generate wages to use as a 199A base. 

I have brokers in various states where vacation homes run into deductible issues, HOA reserve issues, litigation, just to name a few examples.

Short term rentals might offer different deductions compared to long term rentals.Risk Tolerance: Assess your risk tolerance.

Make deductions for cleaning and repairs, refund the rest in the manner prescribed by the law.In the future, I recommend tightening up your rules.

It sounds like it is as I suggested where they won't create a rent control law but change the tax code to take away some deductions (maybe depreciation) if rents are increased over 5%.

just like you likely do with your 401k (through consistent payroll deductions) or an IRA through annual contributions, if not monthly.  

You are able to add back your non cash deductions which is deprecation.

If the assessor finds out later the property owner lied and was not intitled to the exemption, state law requires the assessor reassess the property and levy the appropriate tax. 

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.