There are currently some holes in the drywall that will need to be fixed, so should I charge the tenant for that damage and withhold it from their deposit when they move out? 

This will free up slots for Fannie/Freddie. 

My tenants of 4 years are moving out and they showed me a hole in the carpetThe carpet is kinda old and I think it was normal wear not anything they did wrongTenants are expecting to pay for it out of their deposit but I don’t think they should.

Especially interested in implications to others on the lease, security deposit (they also have a pet deposit), etc. 

Worst case is 1year and if your willing to lose your deposit you can leave any day you want.  

Any money-deposits, advance rents etc are yours at closing.

My employees who was at the deposition hearings said the plaintiff attorney was shocked and dismayed to learn he moved to FL., banged on the table on hearing that, and gave up afterwards.

Look through the lease (hopefully there is a lease) that they signed with the previous owner, if the lease seems to be decent and everything is documented like it should be (security deposit, move in checklist, etc) there is a better chance if the tenants are better quality. 

Some things I wanted to implement such as asking for a security deposit (in the estoppel there stated that there was no security deposit given to the previous landlord, and changing the parking spots).

Honestly was going to sell home to get cash injection for business but we were approach by agent who had a tenant that was willing to rent for 2300 a month and pay two months in advance plus deposit .