Oh, and if I own it, I have a wider range of how to dispose.

BTW, if he disposes of property for a less than his basis, he won't pay tax.

We have informed the tenant we will dispose of his belongings at end of the waiting period.  

The extra year can be used to dispose house if they don't exercise option.

An advantage you have is with proper documentation of the rent owed and damages getting you a judgment in civilian court, you can send the paperwork to the Defense Finance Accounting Service to process a garnishment against his wages where 25% of his "disposable" income will be garnished monthly until you get paid back.

I don’t have a lot of disposable income maybe $10k.

  $800 excavator and operator, $400 oil "disposal" (likely involving them reselling at a profit). 

The contractor will dig 3-10 tons of dirt and dispose at a regulated landfill and then collect confirmation samples from the walls and floor of the pit for a closure report.  

If your AGI is between 100 to 150, the 25k is phased out and get partial deduction until you reach 150k.If your AGI is more than 150k, then those losses will be suspended (unless you qualify as RE professional) until when you sell the house and will offset your passive gain when you dispose.

Lease Agreement says: Quote:CARE, CLEANING AND MAINTENANCE: Except as prohibited by law, Resident agrees:(a) to keep the premises as clean and sanitary as their condition permits and to dispose of all rubbish, garbage and otherwaste, in a clean and sanitary manner, unless Owner/Agent has expressly agreed otherwise in writing in an addendum tothis Agreement.