Here's an explanation of the law: https://portal.ct.gov/dob/rental-security-deposits/rental-se...You must send an itemized list of deductions.

Further, if planned well, you can have lots of operating expense deduction.

He called locksmith which cost 350$.Now, tenant wants me to deduct the amount from the monthly rent.Generally speaking , whose responsibility is this?

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.

You can't deduct reasonable wear and tear from the security deposit in Wisconsin, even though I sometimes see landlords try.

You can deduct that from their security deposit, send to collections or sue them. 

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.

I am trying to find the most relevant information for our strategy to ensure we get the best joint tax deduction options against MY W2 income.Is the following strategy correct?

The real estate appreciation, you can reduce your taxable income, and the interest on your mortgage is usually deductible, which is a nice bonus.

Depreciation recapture tax is the taxable amount on deductions you made for property depreciation.