I thought about what you guys have said regarding depreciation recapture and rental properties.
Here's how I understand it:
The IRS is going to depreciate the basis in the house over 27.5 years. So the IRS is going to recapture all the depreciation I've taken on the house. Can't do a darn thing about that.
Now if I decide NOT to lump the Kitchen cabinets and appliances along with the house for depreciation purposes, I can get larger depreciation amounts every year. This will help me run a larger loss than I would if I lumped the kitchen stuff with the house for depreciation purposes. So depreciating kitchen stuff at 5 years is sort of useless to me, b/c I will run a loss regardless.
But I **THINK** that larger loss gets translated into a larger NOL (Net operating loss). Which I can carry-forward year over year. I can use that NOL to reduce the recaptured depreciation when it comes time to selling the house. I think it reduces the recaptured depreciation dollar for dollar.
I'm reading up on NOL right now, so I'm not really sure if this is how it will work.
I'm not sure how NYS or NYC handles depreciation recapture.
Feel free to correct where my thinking has gone off the road.
Thanks.
