Subtract all the items from the deposit.

Jon Crosby (not letting me tag) has a great spreadsheet that I found almost covered everything for me, and I just added and subtracted a few items, but it was more than enough to do the trick to analyze a STRP. 

If you add or subtract anything or sometimes even move where things are located you will get #REF errors or worse, it will pull the wrong number and you won't realize it. 

For a security deposit with an inherited tenant, I will only subtract for NEW damage that happened after I bought it. 

Using SchE as a guide, take your rental income and subtract your expenses. 

Just addition and subtraction

Now take that number and subtract your estimated rehab (make sure this is as accurate as possible and add another 10% or so onto it).

When you have all of these numbers, you should add them together along with your desired profit, then subtract them from your purchase price.....if the numbers work, then do a full gut rehab!

My understanding (I'm not a CPA) is your depreciation is calculated on the purchase of the home (subtracting out land value) and doesn't reset with each new evaluation or refinance (although that would be great if it did). 

Subtract from that what you put into it to get the sale amount you took and that’s the money you gained.