A buyer or a seller may pay real estate taxes, better if the buyer pays, but who ever pays them gets to deduct them on federal returns!

Assuming one is in a 30% combined Federal and CA tax bracket, you're looking at $9,600/year tax refunds, your carrying cost is equivalent to $2,800/month after mortgage interest deduction.

If we end up doing this deal, I'm going to deduct some of these reno costs from my offer for sure.

My two partners and I are making about $1500 per month in Cash flow only deducting the mortgage.

I deducted all expenses and started to depreciate.

After that, it is easy to take them to Small Claims; even if you can't garnish their wages or levy their bank account, at least you will have a Judgment against them and here in CA, that Judgment plus the eviction (Unlawful Detainer) will stay on both their court records and their credit report for 7 years.

If that does not fly, try securing the Vendor's agreement that you will handle the remediation and the cost will be deducted as an adjustment at Close.Somewhere along that path, someone will tell the appraiser to don a respirator and do his job.

They may not have the deductible to have it repaired.

Can we deduct the cost of the insurance deductible ($1,000) from the tenants security deposit?

Landlord is obliged to correct the problem within a reasonable amount of time OR failing that, tenant could have the repairs done and deduct from the rent and provide receipts for the work done.