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. 

Following inspection, there were sealing issues on the patio door and the furnace/laundry unit were both on their last limbs.

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

They also left a bunch of construction items in the patio, which the sanitation department does not discard.  

Just a couple that I have thought of: Updating countertops and appliances in Kitchen, new deck/patio, new flooring/carpet.

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

Is there a patio or back yard space?

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.