No one ever complains of the rent coming in, but instead of the treatment/damages of the house.     

The tax treatment of replacing HVAC systems depends on various factors, including the type of property (residential or commercial), the cost of the systems, and whether they qualify for immediate expensing or need to be depreciated over time.For residential properties, the cost of replacing HVAC systems is typically considered a capital improvement rather than a repair.

I don't know if the situation with the "nasty" tenant is salvageable or if there is any legitimate basis for their treatment of you and your staff. 

A friend of mine in his early 30s got hit with a $13 million dollar bill for a cancer treatment.

To the guy who stated “especially heroin those guys are as good as dead... and we deal with this in the hood all the time“ etc etc....I work in the substance abuse and mental heath treatment field.

With that treatment, you may receive a step up in basis for one-half of the property when a spouse dies.

The losses could be used against other sources of passive income and that is it.If it is a standard self storage model, and thus treated as rental income, then in order to get anything other than passive treatment you would needs REPS status. 

Of course this would mean newer investors would get preferential treatment which would make current LPs unhappy

My investors are normally other real estate investors who want a better deal, with better treatment, cause no one should be reduced to being a faceless number unless they want to be.

It overrides the 1231 treatment you are arriving at.