Consulting earns ordinary active self-employment income. 

U can definitely do it in smaller chunks....it taxes at ordinary income so strongly advise U do it in chunks to keep yourself in lower tax Brackets.the only offset I know is to wait until you have less W2 income so it is taxed at lower rate.

If you go to home depot and spend $500 on materials, but don't have the receipt, how would the IRS know you did not purchase a new grill or patio furniture for yourself.

Common Area: set ground rules for living room, patio, parking... be very clear about guests (stayovers), guest consistency before they become a tenant, and pets.

In his opinion, my wife can draw salary and pay tax on it as a general partner (depending on how much we decide) and then rest will be distributed to both of us (don't know in which term) and will count towards our ordinary income, saving 15% in FICA/SS tax.

Are my requests entirely out of the ordinary? 

You'll be subject to ordinary income and possibly self-employment taxes as well.  

Nothing out of the ordinary or hard to finance. 

Here is an excerpt from an article on the subject that I believe breaks this down fairly well:Gain, to the extent of the depreciation claimed that exceeds what would have been allowable under straight-line depreciation, will be recaptured as ordinary income, and, thus, taxed at rates as high as 35% in 2003 and later years (ordinary income rates), but the amount of excess depreciation subject to recapture may be less for certain low-income housingGain, to the extent of the depreciation that isn't recaptured as ordinary income, will be taxed at a rate of 25%.The balance of the gain will be taxed at a rate of 15%Example – In January 1986, you paid $1.3 million for an apartment building (not a low-income building), of which $1 million was allocated to the improvements.

If they are leaving, this is my inspection to determine what cleaning or repairs may be needed after they move out (either Tenant-caused or just ordinary upkeep).3.