Yes, as @MarilynG1 stated above, the kids could claim half of the expenses and income, in which case they would report half the basis in the property, so each child would be claiming half the depreciation and you would claim none.
In this scenario, the kids will still end up having to claim all the depreciation (when they sell)
If you are a 1/3 owner, the IRS might have a hard time accepting you making a special allocation and not taking 1/3 of the income or loss of the rental. I understand you say an expert said you could do it this way, but it's a grey area. The IRS doesn't want loss or income transferred to the return that most benefits from that income or loss.
In your situation, you might consider reporting half of the contribution you made to purchase the property as your gift to each child. You would have been on the deed, but only as a technicality, thus eliminating the rental allocation issue. (the kids could justify allocating 50% as they have been doing).
This will not make the amount of depreciation each kid would need to claim when sold any different. The kids would have each claimed 50% of the Depreciation on the rental and you would claim none rather than 1/3. The AMOUNT of depreciation would not change.
Depreciation is claimed and is a factor when the asset is sold. There is no avoiding that unless an asset is inherited.
Using the same example, say you purchased a 300,000 rental and you put 100,000 down.
You could gift each child 50,000.
If they deprecated 90,000 and sold for 400,000 they would still report 45,000 deprecation recapture and 50,000 Capital Gain each.
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