Lets face it, many folks expense as much as they think possible against their rental income. This reduces the net operating income (NOI) for the property, and thus the tax liability you owe. This could be a big mistake if you're thinking of selling at any time during the next 3 years.
For example, lets say you expense an extra $1000 against a property with expenses that may be a little questionable. If you're in the 33% federal income tax bracket, this will save you $330 ($1000 x 33% = $330) on taxes you owe Uncle Sam. BUT, at the end of the day, your taxes show the property NOI is $1000 less.
When buying, most investors want to see the last 3 years of property tax returns, since these are the most reliable and verifiable. In addition, investors often base the purchase price on the net operating income (NOI).
When selling, we want to maximize the NOI. If we sell a property at a 7% capitalization rate (similar to a rate of return), then $1000 of increased NOI is worth $14,286 ($1000/7% = $14,286) in increased sale price. If we take into account selling cost of 7.5% and assume we didn't write off that extra $1000 in expenses for 3 years ($330 x 3 of increased taxes), we would net $12,224 more for the property.
In summary, for every $1000 of increased NOI (i.e. fewer expenses), you will make an additional ~$12,000 when you sell. Now that's a good investment!