Hi, I read a similar answer concerning federal taxes and I understand in that case depreciation must be taken. However, the question about state taxes is more complicated because some states, as I understand, are "decoupled" from the federal taxes on capital gains. I live in Maryland and in my case, we never made money on our PA rental and our son eventually lived there rent free before we sold it. Because we never made any money in PA we never paid any income taxes there or took any depreciation there. We DID however take depreciation on our federal taxes. I called PA's tax help line twice and one guy told me PA tax is decoupled and we only need to use the original basis value (plus cost of capital improvements) without depreciation and the other guy told us the opposite. What do I do?
