I really appreciate all the feedback. I sent an email to the dueno saying that I can't move forward due to a lack of trust and that I would like my $1800 pesos back. I told them I think it's better that I find a new place and they re-post on craigslist for the price they really want.
I realize I may not get my deposit back and will consider going to the AFIP. At the same time, this owner who is renting the department privately, also is the manager of a VERY high end inmobilaria, so I might just be needing to post a warning on this site. We'll see.
Separately, I am again looking for a place near Plaza Italia or Villa Crespo and can pay $850/mo. So, if anyone has any leads, please pm me.
Thanks!