The same is true for a house—placing a tax-advantaged asset into a tax-advantaged investing account cancels the tax advantages (or many of the immediate ones).Maybe @Michael Plaks or @Kaaren Hall can explain this better or correct my understanding here?

Do you understand that asset class and market?

I highly suggest you get involved in some of the local meetups.

I'm a property owner on BP and a W2 employee (nothing involved with real estate).

Quote from @Devin Peterson: Quote from @Hassan Tejan-Kella: Hello all I'm a 6 year investor mainly involved in long term rentals.

It’s written explicitly for investors to help them understand rehab projects and budgets.

Schedule inspections at key stages, and involve your property manager early for rental insights.

Your mistakes, and the reason why you don't understand why there is a conflict, is because you don't understand the meaning behind these analysis tools. 

I understand that I need to prorate my expenses based on the square footage that is being rented out.However, I plan to move out soon and rent the entire house.

Unless you come from a corporate job that is involved in this field, it is not a place I recommend to start.