@David NinoThe most important thing it to confirm that the tax return is correct and properly filed with you taking advantage of deductions/credits available to real estate investors.I don't have information on how many state tax returns you are filing and how many properties hold those 23 doors(1 apartment complex vs 23 sfh's), I would have to say that is one really competitive price.

After that you’ve lost the 100% deduction forever, even if you move back in. 

FYI, insurance make consider each unit a separate claim with its own deductible.

After that amount, you cannot deduct any more interest.

As a specialized real estate CPA, I'm here to provide expert guidance on your most complex tax matters, from navigating 1031 exchanges and cost segregation studies to optimizing your rental property deductions and handling multi-entity structures.

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.

Hence any "deduction" in massive air quotes is not available.

However, remember to consider deductions, depreciation, and other tax benefits associated with rental income. 

Bonus depreciation allows you to deduct a significant portion of the cost of qualifying property in the year it's placed in service.

As a specialized real estate CPA, I'm here to provide expert guidance on your most complex tax matters, from navigating 1031 exchanges and cost segregation studies to optimizing your rental property deductions and handling multi-entity structures.