However, the Most alarming thing is they have allowed the water bill (they pay for all utilities, but the city bills the water to me) to mount over $2k over the last several months.

It was a law that simply explicitly states something that was lreay allowed.  

Just get a security deposit that you hold in escrow from the seller’s net proceeds (as high as you can negotiate or is legally allowable in your area, in my area the most you can do is 1 months rent) and have the sellers sign a lease/ post closing occupancy agreement like a normal tenant.

There is a lot of value with bonus rooms, that allows people to do what they wish with the room.

It's the focus of most of our RE podcast content, including the featured episode this week, with @Chad Carson, and @Dave Meyer.Curious - why do you think that this wouldn't be allowed on BiggerPockets? 

Are you allowed to use let’s say 230K of the deduction in the year it was realized to bring taxable income from W-2 down to 70k and carry forward the 70k to the following year.

FYI: most cities won't allow a tenant to live in a basement, but they don't care that an owner lives in it.

It’s very helpful and free to use, allowing me to track maintenance, rent, mortgage payments, and all personal expenses related to my rentals.

Yes In Gods BackYard (YIGBY) is an incentive program many states offer that allows churches and other religious non-profits to develop low-income housing on their land with speed and cost incentives.

Your partner may be able to trick TurboTax into "allowing" a loss by manipulating some checkboxes, but it will be against the tax rules.You have a tough dilemma.