Yup, I'm seeing it right here in the lease verbiage "Tenant responsible. . . except such damage, defacement or removal caused by ordinary wear and tear, acts of the Landlor, his agent or of third parties not invitees of the Tenant..."

If Short Term, I have read that these pass through as ordinary income instead of short term capital gains --- is that true?

Plus, my "flip" type profit of around 30% is all I have invested in the property.....and by holding, it's not taxable today (but deferred until I sell).Fix/flip is taxed immediately as ordinary income.

Depending on individual circumstances self-employment taxes would br roughly 12.2% above and beyond ordinary income taxes... 

I think your underlying question is whether or not you can use a passive loss from a rental property to offset ordinary income.

If we distribute the money to make the investment we are taxed at ordinary tax rates.If you have money in a traditional IRA or even a Roth IRA you can Roll it over into a self directed IRA.

I suspect that a judge would hold you to a higher standard than an ordinary seller.

In his latest book, “Real Estate Note Investing,” he breaks open the “black box” of the financing side of real estate and shows ordinary investors how to think “like a bank” so they can do more deals and be more profitable.

Or you could bite the bullet, pay ordinary income +++ tax on the flips and then buy your holds later.

I think I would do separate agreements to cover any new items and make sure they realize the deposit is for any repairs that are not ordinary wear and tear and not rent payments security unless that reason exists as part of their rent even though that may be part of their deposit.