But I'm not that confident yet The loss is limited to $25000 only if you are adjusted gross income is $100,000 or less.And yes, as long as you are not benefiting from these deductions then you don't have to worry about the depreciation recapture rules when you sell or exchange in the future.

Do note that only the mortgage interest that you pay is deductible, not the principal payments, but you'd also be able to take depreciation and possibly other expenses on the property such as utilities or maintenance.

That is, can the owner deduct $37,500 (750000/800000 * 40000) or $33,750 (750000/1000000 * 45000)?

However it can depend on a lot of things like your deductible, your credit, coverage.   

There's not really enough information to give a good answer, but I can suggest, reduce your coverage, increase your deductible, and have your tenants get their own renter's insurance.Maybe not "top" tips ...

The margin payback will happen outside of your property purchases, your interest on the loan is deductible, and you aren't spending your cash.

Do I put a low deductible on my wind/hail and then use insurance to pay for a new roof once it fails? 

If you live far away and use a property manager, deduct 20% from that. 

The key thing to know about doing rental arbitrage is the thing you're missing out on is the ability to deduct appreciation of the property itself since you can't depreciate assets that you don't own.

On my spreadsheets I’ve always deducted 8% (sell costs)  from the actual equity on my properties but I haven’t thought about all the grainy details until now!