When rental income does not show on your tax return, Fannie will take the gross rent per your lease and apply a 25% vacancy and then subtract your PITIA as you mentioned above.

I have written a letter out, can anyone tell me if this sounds good or if you would add/subtract anything from it?"

You don't want to celebrate getting rid of her (addition by subtraction) only to get sued a few months from now.

Then we need to subtract transactional cost of selling (broker commission), so that brinks us down to $64.5 million.  

In order to fully defer all tax you must purchase at least as much as you sell - that means the gross sales price minus only the costs of the sale and before the mortgage is subtracted.   

If you do sell a property, its the basis you subtract from your net sales proceeds to compute your gain.

Your basis is not taxable, so subtract that. 

I'll describe a simple hypothetical case:  If the gross collection was $1,000 in one month, no fees were subtracted and the split terms were 50/50, the amount due the lessor would be $500. 

I subtracted the rent owed and all the repairs and cleaning from the deposit and they owed me about $3000.  

Your daily rate certainly should be subtracted from future payments if you return to live there.Now with that said, many ins policies offer "loss of use" and It would not be unreasonable to ask for the DIFFERENCE.