Some people are different breeds.

That's to lower the risk of vacancy and turning the unit, because that is always a possible outcome in these cases, in the tenants mind--Evil Landlord vs friendly family pet kitty (if it were a Pit Bull or other insurance restricted breed dog the animal would have to go).You have now been introduced to the "Service Animal", and over time will probably be introduced to the "Neighborhood outdoor cat, that has just been let inside to be petted and is not theirs".

Ask what breed it is as your insurance provider may have an issue with certain breeds.

We also have a list of restricted breeds due to insurance reason.

As Jay pointed out, there are some bad characters with plenty of cash looking to set up a meth lab or their dog-breeding business.3.

It doesn't need to be separate liability insurance, it just needs to be a normal renter's insurance policy, but some renter's insurance policies exclude dog bites or exclude bites by specific breeds of dogs.

I don't prefer to have animals in the home as it has brand new carpet.My first thought is to deny the tenant due to the size and breed of dog, however should I consider the option of a large pet deposit and pet rent.

Pit bull and a couple other breeds make up the majority of those payouts.

We have already said no puppies and our HOA limits breed and weight. 

Additionally, correct....I'll stay in this house until I buy because it's hard to find somewhere else that would allow a big old "aggressive" breed.