You will not recover the closing and holding costs.You are probably wondering why I say the Holding cost should be $4,200. 

The first time they broke in, they stole all my husband's tools (was an inside job but we never recovered the tools).

If the proceeds are great enough to pay off the 1st with some funds left over, you should be able to recover something if you are next in line.Other than consulting with a foreclosure attorney in your area, and confirming if title is clear other than the 1st mortgage, I’m wondering if offering a deed in lieu of foreclosure subject to the first mortgage may be worthwhile.

That's a lot of money to try and recover when at best you're looking at a Equity Recapture loan of 75-80% LTV after stabilization.

Repairs and maintenance costs made PRIOR TO the property being placed in service must generally be capitalized (added to the depreciable basis) and the costs are recovered over 27.5 years as part of the building depreciation expense.For example, let's say you spend $275 to have the place painted.

To answer Brian's question, I believe you just want to cut your losses and recover some of your cash and possibly pay back borrowed money.Assuming my hunch is correct, you just claim your losses, and there is no tax issue.If you do have a taxable gain after selling this property, you will not have adverse tax consequences, either.

The effort to recover it might be too much effort (expense and time). 

Unfortunately, I am recovering from a couple medical problems and cannot walk at this time but it has given me a bunch of learning time. 

A unit is renting for $100/month under market rate at $800/mo will take you 8 months to recover 1 month of vacancy.  

If she fails to pay, they will shut off the water and she'll either get with the program or move on.The utility company has an agreement with her so they have to recover losses from her.