Yes, the deduction states it should have a separate entrance, etc, but they've long ago realized times have changed, and so, as long as you're not deducting a huge % (i'm at 5% of my sq. footage) of your square footage as your "home office", you're safe. 

It all gets stripped to the outer walls, mechanicals replaced, and upgraded anyway.About the only things we consider to add structural value to a "distressed" SFR is the remaining roof life, HVAC upgrade (gas instead of oil, central air instead of window units), high ceilings (of the lack of low ceilings), replacement windows, and actual above grade square footage.  

Sell properties on contract for a 10-20% premium each - no bank qualifying.Another option is to add square footage if the neighborhood(s) will bear it.

I have a rental house that is high end and priced competitively for the neighborhood/sq. footage.

Then multiply the square footage by the going rate for your area and see whether you'd come out ahead or behind.What would you do with the space?

If its a higher end neighborhood you can estimate a higher cost per square footage conversely  if its a lower end property you can spend less per square foot.

Can you remodel that house, add more square footage, and have a nice house on a huge lot?

-Jeff The whole thing is calculated and then you will deduct the percentage in this case 50% assuming he actually uses it.Otherwise by the sq ft of the room versus the sq footage of the whole house including basement.

What type of property did this replacement occur in and how much of the square footage was replaced compared to the total square footage of the property?

If you can measure the size of the house from outside when you can't get inside simply figure the square footage.