These costs are added to the cost of buying your home, so they might possibly reduce your future capital gain taxes when you eventually sell it.

We are already seeing Portland landlords take their rentals out of production and sell the SFRs there has been such a huge run up in values and there is SUCH a HUGE shortage of SFRs available it makes no sense to keep them as rentals.. there by reducing the housing stock even more. 

That includes items such as a bigger water meter, work in public space, updating the energy efficiency, fire sprinklers, and so on.

After deductible I have total ACV of $8k out of which they paid $5k and $3K is recoverable depreciation when work is done.1> If I do the work, Insurance said they will reduce the amount to a great extend as I do not have overhead and profit.

All three of them are just adding to your cost:A)   You're not paying the interest, but when you are reducing your cash flow going with a shorter term, you ARE paying on the principle. 

But a 1031 exchange where you replace that real estate with other investment real estate (of any type or passive or active) allows you to indefinitely defer all tax on gain and recapture of depreciation.In your case with the right replacement you could turn this sale into a completely tax deferred sale that also reduces your net loan liabilities personally, provides income for you, and adds depreciable basis for you to write off. 

He offered to reduce it to a $250 lease renewal fee without me asking.I can see how this can get out of hand and eat into my cash flow if it were to continue happening, so I'm looking to nip this in the bud with my PM.

I feel if you do things right may be you can do 1.5 to 2 times the regular LTR rent but i have seen that the fulL potential of a property in STR market would not reach for atleast 6 to 12 months unless the hosts are able to put lot of energy in getting the reviews and making operations professional 

The servicer proposed a loan modification agreement which reduced the debtor’s monthly mortgage payment, monthly escrow payment, and interest rate.

However, my friends and clients who are selling now are happy to take profits and reduce their risk going forward.