To make it very simple, if an expenditure produces both current and future year benefits, the determination as to whether the cost should be capitalized or expensed should be based on a careful examination of all the facts.Taxpayers must capitalize amounts paid to restore a unit of property.

It has 6 units, 5 residential and 1 commercial and naturally it would be advantageous if I could classify the property as residential and be able to depreciate over 27.5 years vs 39 years. 

Although there is not much inventory the deals we land do produce a good amount of cash after debt.

Housing by its nature is diffuse and fairly well insulated, credit is not.

@Cassidy Burns Morning Cassidy, If bookkeeping doesn't come naturally to you, then outsource and do it quick, as this could really impact your health, seriously. 

Naturally I intend to consult with a lawyer and CPA, but I want to have a better understanding of the pros and cons and prospective plan before sitting down for discussion.

The banks are only considering any income from my rentals once I can produce 2 years of tax returns for that property to them, and still once I am able to do so they only take into consideration 60% of the income.

LOL.your not being pessimistic your being a realist.. not a dreamer being sold how great this can be.its a big boy game in my mind you are going to have losers.. and the bigger players can average them out.. individual investor who step into the space with little or know knowledge are in for a real roller coaster ride.. and your going to get schooled in human nature and the way a defaulted US borrower thinks and acts..

And there are only two somethings that produce income - capital and labor. 

It's unlikely you would have a water source capable of producing mildew/mold around the entire shower.