So, you should still get the deduction, just not this year.

Your wages are all that should be deducted on your P&L.If you are a sole proprietorship you should not have any payments to yourself deducted.Out of curiosity, I have to ask why your accountant is unreachable at a time when you're supposed to be able to ask these questions.

Some you can deduct from the security deposit, some not.

Some of that depreciation was not deductible due to my income.

Would it affect depreciation and mortgage interest deductions?

Just to be clear, almost all of these costs would either be paid at closing for the loan or would just be deducted from the loan.

Sharad it depends on the bank itself and what their books look like.In a depressed area already it doesn't make sense to do repairs as the property will be vandalized yet again and the bank will throwing money down and endless hole.If you have say one or two foreclosures on a street in a nice area then yes a bank might do repairs to sell to an owner occupant at a higher price.Depending on the age of the home you can't do just carpet and paint.The bank would need to replace all outdated fixtures,countertops,change layout problems,etc. to get full price.Paint and carpet will not get them close to full value as a buyer coming in will want everything done.It's like a flipped house that has been half way done.The buyer will deduct all the improvements they will have to make for it to work for them in the offer price.There are some banks letting the former homeowners rent in the property.It keeps the property occupied which gets rid of banks dumping for cheap.The bank hopes when they do sell in a few years the market has recovered.

Right now I just have Quicken files for the properties, a corporate kit for the one LLC, and Excel spreadsheets where I input the information from my deductible receipts.

While you'll pay a slightly higher interest rate for an investment property, there are tax advantages - being able to claim depreciation for the house itself and any capital improvements, as well as being able to deduct running costs - all repairs, property tax, insurance, etc, as well as mortgage interest, which is deductible in both scenarios.There are still some complications in my mind to buying it as an investment property and being her landlord.

If I buy the house and then pay off the taxes can I deduct everything?