Using Google Streetview (image capture 07/2022) to virtually drive the block, shows 5 vacant properties, one of which is significantly fire damaged.

A landlord can keep those reserves and use it for normal wear and tear or more serious damages.  

So I said its probably best to just pay the tax.If an investor overpay a ton, just to save on taxes, most likely they'll be inflicting significant financial damage to their portfolio… it’s probably best to opt out and pay the tax.1031s aren't structured in a way that makes someone "overpay" - it mainly comes down to poor planning which puts them in that situationNever let the tax tail wag the dog!

I would only end the lease or evict if I thought I caught the smoking early; otherwise, the damage is done.

This is because of less vacancy/turnover, rents increased much faster, less tenant damage, less maintenance and repair costs, and most important of all MUCH higher appreciation due to being in more desirable areas that actually improved instead of staying stagnant like many S8 areas. 

That can either lead to possible damage OR merely make your place inaccessible.

We use a lot of caulk on damaged wood to help fill in gaps, etc - especially up high on the sides of houses.  

So, he will reap the benefit of the reduction in P&I on the loan over time.If he is unable to obtain financing in one year, it would revert to a six month lease and he would be required to pay a damage deposit at that time.I am calling this an "Agreement of Intent to Purchase Residential Property" and not a Lease / Purchase Agreement.

Who's responsibility is it to repair the damaged siding?

Then we have a couple of photos to back this up.Over 10 years of renting we have had very little damage or trouble due to dogs.