well since this will most likely be taxed as ordinary income (assuming 35% state and federal taxes to be paid) you will pay Uncle Sam and Godfather Christie 3500... leaving you $6500 ($5000 nets approx. $3250). 

PROPERTY MAINTENANCE: Except for ordinary wear and tear and Casualty Loss, Seller shall maintain the Property, including, but not limited to, lawn, shrubbery, and pool, in the condition existing as of Effective Date (“AS IS Maintenance Requirement”).

@Brit FosheeI agree with you completely.  

B and C for me for the same reasons Brit mentioned.

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

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

You pay ordinary income taxes, get really no tax benefits, pay social security tax and have to start over again after you sell.4.

The Brits are FAR too proper to allow such shenanigans

If you held it for one year or less, you will be taxed on the Short Term Capital Gains, which will be at your ordinary income level.  

I thought an ordinary bank loan would work however, I'm quite young and a bank would probably just laugh at my credit score, also I learned that banks don't like to fund rehabs.