Not only whether you capitalize versus expense, but things like recovery period, section 179 bonus depreciation, de minimis safe harbor for immediate expensing and even just how to establish basis in the first place.

My "csh recovery" number is closer to 2 or 3 years.There are other problems here, but that one problem of "too long to recover my cash" would be enough for me to pass on this deal.

I was a double major, collegiate athlete, and working 20-25 hours a week.

I am so sorry you have to go through this stress and I hope your tenant makes a full recovery.

Also while I'm bullish on further appreciation in Merced due to the reasons listed, I find that historical recovery has been slow.

He says to expect no more than 5-10% recovery, if anything at all.

The rest it is either explicitly illegal in the entire state (Such as California), or part of the state (Such as Texas where it is illegal in Dallas and Austin).Specifically in California where the question is being asked about, both the prospective tenants, as well as DEFH (Department of Fair Employment and Housing) can bring suit against the landlord and collect "seeking remedies that may include recovery of out-of-pocket losses, an injunction prohibiting the unlawful practice, access to housing that the landlord denied, damages for emotional distress, civil penalties or punitive damages, and attorney’s fees."

My guess is owning a rental property with someone else living in it and trying to claim that as a residence only works until it doesn't...then you have to pay not only the taxes due, but also the penalties and interest.Ask a professional athlete in the NBA or NFL in how many states they have to pay income taxes.   

Too many CAPEX costs will add to the cost within that time period and will make your recovery of cost go to more than 15 years.Recovery of your cost is the most important number for analysis for a rental property. 

Additionally, it can help maximize renovations and improvements.A Cost Segregation study is an IRS approved federal income tax tool that increases near term cash flow by utilizing shorter recovery periods for depreciation to accelerate return on investment.