Get a good CPA, take his (or her) advice, and keep good records so you can maximize deductions.

The advantage here is 2% per year of depreciation deduction and after ten years there is no capital gains tax when I sell.

Deductibles?

Every Landlord's Tax Deduction Guide- is a really good book on taxes and setting yourself up for success as a landlord. 

Then, you still have all the deductions (because you always make sure you deduct to the max, right?).

I would do it now, show the bill to the outgoing tenant and deduct it from their Security Deposit.

The insurance, however, have not assessed who is responsible for the damage (they have not even looked into the bylaws) and just made an agreement with the HOA that it (our homeowner insurance) will issue a check which we would have to send to the HOA to pay for the repair (with additional $500 deductible on our part).

i.e the IRS doesn't care how how loss making the property (from a yearly cash flow perspective) when calculative capital gains taxesYou will either get to deduct that loss each year (If your AGI is under $150k)Or when you sell it those losses generated that couldn't be deducted when your income is too high become available so they'll offset that gain. 

Depending on the tax treaty with your home country, you might be able to deduct the withholding tax from your home country's taxes.

Look at the zillow mortgage calculator and you will see that : $807 goes towards the principal and that would put your out of pocket at $1,300 minus $807 : or $493 (on paper as you will still have to make the payments every month). and lastly, the interest you are paying is $1,200 per month or $14,400 per year and if you are in a (lets be conservative), a 15% tax bracket: then you will be saving around $2,160 (deduction) for the year divided by 12  months: $180 per month or $493 minus $180 : $313 to own your home per month.