It's not just the taxes, but being able to at-a-glance look at expenses by the month and year, profit and loss calculating automatically, and even cash flow by property and total portfolio by month and year.Thanks for suggesting it!

I saw this as a way to avoid a potential month loss rent due to tenant vacancy.

Should I just chalk it up as a loss and move on?

@Steve Englehart why would you sacrifice the tax penalty losses for short-term cashflow gains?

That still has the 50% use requirement, but can be used to create a tax loss. 

But because he raised rents each year, and rents were increasing by ridiculous rates, tenants constantly moved, had to sell the property at a loss several years later due to constant vacancies.Finally, the most interesting situation I ran across was a tenant, a 93 year old tenant paying rent on a 2BR apartment for $90/month.

.), how litigious is your state, your own loss history/ratio as an individual investor, the carrier's overall loss ratio in a certain state/area, the deductibles you've elected, etc. 

If the rent payment covers your mortgage and you have a good tenant, why would you get rid of them to take on the expense of unit turnover, because you will have to do one, and the 5% vacancy loss just to increase your rent $150 per month?

>>For purposes of taxes, consult with a CPA to confirm this would work for your situation, but you could have the LLC be treated as a "disregarded entity" and thus, even if you and your wife are members, any profits/losses would "disregard" the LLC and go directly on your personal returns. 

It's simply factual:  you violated the lease by smoking, stop it, remove the resulting odor and that a repeat action could result in eviction and loss of security deposit.