Honestly, we should have been easy clients - we came to him with a plan in place wanting his help on claiming REP status, setting up a cost segregation for a rental property bought and functioning in 2022, so that we could file for 100% bonus depreciation for that tax year.

Hi @Tracy Tsoi,Hi Tracy, In addition to the 750 hour rule, another rule that needs to be satisfied is spending more hours in real estate than all other activity. 

I hope Mario can mitigage his losses by selling the property quickly to stop the bleeding, or re-tenant and refinance to less expensive debt but this serves as a case study on the perils of investing in lower tier neighborhoods.The amount of people on the internet and social media selling the false narrative of how easy it is to create wealth through investing in real estate, specifically these lower tier neighborhoods is upsetting. 

Check for local stone yards or fabricators too, sometimes they have remnant deals.Appliance-wise, focus on durable, easy-to-clean brands.

I can definitely tell you there's still a lot of positive cash flowing and 1% rule deals and you get amazing appreciation.

In other words IRS rules don't allow you to sell it to yourself because you are considered Disqualified Person. 

Quote from @Cali Skier: There is no law anywhere that says you have to apply all the rules the same.

You'll want to consult a lawyer and pay to rewrite the HOA CC&R rules and an insurance agent to make sure you are covered. 

Given you state you "past (sic) all my 7-8 preliminary inspections" a judge may rule in favor of returning the security deposit since items in question (e.g.

Stainless will show dings too easily.Good used white appliances are easy to come by.