@Brit Hale You'd have to see what has sold in the area in terms of lots.

After that, any ordinary pest control is a Tenant responsiblity.

Originally posted by @Aaron Murphy:My understanding is that I be able to use depreciation of the asset to offset income from the asset so that the property shows paper losses for tax purposes.I read that if you are considered a real estate professional you can use those losses to offset active income as well.You are already allowed to use up to $25K in net losses from your residential rental activity to offset other ordinary income without being an RE Pro.  

Taxed at the highest level, which is Ordinary Income. 

This inventory is on top of the ordinary rental stock of homes.

Yes, you would offset your ordinary income by the total loss.

Garage will only be used for the storage of ordinary household items.

Your CPA is probably referring to the net passive loss allowance (IRC § 469(i)(8)) that sets a $25K limit on the amount of net passive losses you can take against other ordinary income.  

As a Brit expat in the US I have no connection to PA.

The deed would have been put into your name from the very start (assuming this is an ordinary transaction, not a "contract for deed".)