Where else can you get "paper deductions" on a property that allow you to offset income when the real value of the asset is actually increasing?

Given the state of the rest of the apartments and statements from other tenants, the place probably was this bad when the guy moved in so I wouldn't be deducting any of the existing issues from his deposit.He is stressed out about losing his home, but will likely not pass the screening/background check to stay.  

Are they requesting this for tax Deduction purposes?

I will have more frank conversations with people I have a working relationship with...but Ive seen too many colleagues accused of fair housing violations for the stupidest things, and frankly I dont want to pay the $5,000 deductible on my E&O insurance to settle the claim.http://realtormag.realtor.org/law-and-ethics/law/article/2009/04/6-ways-avoid-illegal-steering

Now I have no cash to pay them.Do i deduct the total book value or is half going to each side of the equation?

A CPA or Tax Attorney will assist you with what you can and can not deduct, but will mostly come down to just what you've invested in the property, not items which affect you personally. 

I would charge them (i.e. deduct from the security deposit)  the cost of hiring your contractor to repaint the walls, perhaps even landscaping, depending on your lease agreement.

Hey @Levi Carter welcome to BP, and congrats on your first flip!

Hi Saul,To be clear for others it looks like ( not sure ) what Richard is posting is a bank levy and not a wage garnishment.Bank levy is taking a lump sum out of the account versus ongoing with a wage garnishment from the place of employment.The banks are supposed to check before they do the bank levy that the funds are not Federally protected.

You must deduct the condo assoc fee.