You reduced the amount of untaxed capital gains you’re carrying forward but you didn’t create an expense or a deduction today.

Which is the result of applying depreciation: https://www.biggerpockets.com/forums/51/topics/1121063-expla...Real Estate Professional Status (REPS) is used when you have net losses and need a way to deduct these losses against your non-rental income.

I think it's fair to say it's beyond normal wear and tear, but I'm not sure how much is fair to say "I'm going to have to deal with this somehow, and because of the scratches I'm deducting x." 

I know there are limits on how much you can deduct for each year but my guess is that you would be fine with only one rental.

I am confident in my depreciation numbers on the dwelling but I make an assumption that my other tax deductions will all occur in the year that I have the expense when I know my CPA depreciates some of them as capital expenses over time. 

You document the damage, deduct it from their security deposit, and move on.Bottom line: tenants don’t get a free pass just because 'things happen.'

They get a yearly depreciation deduction on their taxes for the house and may have nearly depreciated it to $0.

But, given that he has a primary residence there already that he must leave (Army doesn't give much choice on location), if he isn't able to sell the property quickly for at least break even, and can't take a deduction for a loss, my thinking is to flip it to a rental (question is which kind makes the most sense), he should be able to cash flow given his monthly expenses, even if only $100/mo, then if he still sells for a loss in a year or two, he could take a deduction.  

For those with a W-2, perhaps optimizing 401(k), H.S.A. deductions to potentially get tax benefits.

You can lower your taxable liability for 2024 while boosting your retirement savings.You have to do this BEFORE you file your taxes.Contribute up to 25% or $66k into a SEP IRA.Have you looked into this yet?