Your overall rental loss may be limited or suspended and carried over, but the amount of depreciation you report depends on the asset and can result in an overall activity loss. Review your rental entries, especially the entries regarding personal use days.
You start taking depreciation deductions not when you buy it but when you begin using the property to generate rental income. The IRS refers to this as putting the property "in service."
Depreciation continues until one of two things happens:
- You have deducted your entire "cost basis" in the property. In most cases, your cost basis is what it cost you to acquire the property, including certain taxes and fees paid at settlement, plus any improvements to the property.
- You remove the property from service—meaning, you stop using it to generate income. This may be because you sold the property or just decided to stop renting it.
Tax Deductions for Rental Property Depreciation
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