Taken directly from the IRS website:Depreciation – Allowances for exhaustion, wear and tear (including obsolescence) of property.

Jonathan - typically STR's will have higher need for repairs than long term rentals as there is greater turnover, and thus greater opportunity for both wear and tear and bad tenants that occupy the space.

Assuming there is no major damage(just wear and tear), I would think that most of the deposit gets returned.

She demanded that I return her full deposit as there is only typical wear and tear.

Painting is expected wear and tear. 

Id say St Thomas or St John would be better in terms of location, ease of transportation among the USVI (A few tidbits I observed and noted: The HOAs (fee seems to range 200-500) may not be so bad an idea for a more hands off approach unless, you plan on managing the property yourself; most of the 3/2s I saw were other vacation rentals, not so many in the way of residences for locals; cost of ownership increases much higher in the long run after running the numbers on a few existing rentals due to stamp tax, increasing insurance costs, specifically the hazard insurance (CBS homes have lower premiums); replacement costs for wear and tear due to the salt water…etc.

The tenants will tear the place apart and the management will be extremely hand's on.

And to do so, it tears down everyone to a lowest common denominator. 

Tear down houses that could be turned into something more valuable.  

If you're touching plumbing or tearing down drywall it requires plumbing.