Even though these are extra-ordinary times I do come back to "give a mouse a cookie...he takes the whole jar".  

Amenities include granite countertops, bamboo floors, huge finished walk-out basement wired for sound, deck and new 20' patio.

Ordinary people don't.

If i was in your position, I would focus on Condos/Patio Homes/Townhomes with a better location or if SFR is mandatory, maybe focus on a different area other than Phoenix Metro.

so I think I qualify on that score.the answer is it depends.Generally if I am buying to hold I just want the price discounted by what my commission would be if i am flipping it its ordinary income either way. 

Although that was for sliding patio doors which are a little more difficult.Go with the Kiwiset Smartlock. 

If you put a nice tree or little patio with chairs then the extension from the interior spaces goes to the exterior landscape area. 

As I understand it, that gain will be taxable at my ordinary tax rate since I had a loss before the recapture.

You disposed of the property and, as such, should recognize gain or loss.The hard part will be figuring out whether that loss is ordinary or capital. 

Deliberately choosing to increase income or lower the expenses that were necessary and ordinary to run your rental is loan fraud, plain and simple.