Basically, residential rental property is not eligible for the SEC179 depreciation deduction. That allows for depreciating 100% of the cost of an asset the first year it's placed in use. But that's not an option with rental property.
However, some rental property assets can qualify for the "special depreciation allowance" which allows you to depreciate up to 50% of the cost of a qualified asset the first year it's placed in business. Then the remaining 50% is depreciated over the life of the asset, where "asset class life" is defined by the IRS.
Overall though, I find it a waste to take the special depreciation allowance, since rental property almost "always" operates at a loss "on paper" when you do your taxes. When you add up the allowed deductions of Mortgage Interest, property insurance, and property taxes and throw that in with the depreciation you are required to take by law, those four items alone will exceed the total amount of rental income you'll receive for the year. Add to that the other allowed rental expenses (repairs, maintenance, advertising, etc.) and your practically "guaranteed" to operate at a loss when you get to the "bottom line" of the SCH E.
Since rental income is passive, your rental expenses are passive too. Your passive expenses can only be deducted from that passive income. Once it gets the taxable rental income to zero, that's it. Any remaining expenses are just carried foward to the next year.
Therefore, your "carry forward" losses will continue to grow and be carried forward with each passing year. You can't realize those losses against other "ordinary" income until the tax year you sell the property.
