You should also change your lease so it complies with general Landlord-Tenant law and makes you responsible for ordinary maintenance.

asphalt driveways suck. or asphalt patios. they are hot, melt, people and cars drag tar everywhere, even in the house. yuck.nothing's better than concrete that's done right. yes, brick pavers look 400x better, but the cost is much higher too!

All this will do is take that wonderful passive income and turn it into ordinary earned income, subject to self employment taxes. 

Ordinary and necessary expenses are deductible.

I know that profits from a flip are considered ordinary income and taxed at your tax rate based off your AGI, however do you include your state taxes when you send it in as well?

S-CorpW2 income – that’s easy, you probably understood that your W2 income can be added BACKK-1 income (box 1 & 2) – also pretty self-explanatory, but just in case, it’s added BACKAmortization/Casualty Loss – Added BACKDepreciation 1120s (line 14 & 15) – Added BackHowever….Mortgage Notes, bonds payable in less than 1 year (Schedule L, line 17)- this is SUBTRACTED from your incomeMeals & Entertainment (Schedule M1, Line 3b) – SUBTRACTED from your incomeNon re-occurring Other Income (1120s line 5) – SUBTRACTED from your incomePartnershipsW2, K1 (box 1,2, & 4), Depreciation (line 16A & 17), Amortization/Casualty Loss – all added BACKNon re-occurring Other Income, Meals and Entertainment, Mortgage Notes payable in less than 1 year, AND Ordinary income from Other (1065 line 4) – all SUBTRACTED from your incomeI certainly hope that some of what is contained here helps your understanding of what goes on behind the "veil of underwriting".

REIT investors can write off depreciation, but since a REIT is not a pass through entity, you cannot apply paper losses to your other ordinary income.

Consider: VR income is federally taxed as ordinary income, including payment of self-employment tax.  

If this is your situation, best to consult a tax professional with specific knowledge of the US-Canada tax treaty.Flip property is taxed as ordinary income (capital gains treatment does not apply).  

I remember coming back from a long family vacation catching the neighborhood 2-3 years kids old eating all of our ice cream with pickles as the topping on the back patio.