This is my 1st year of renting my home out. I lived in it from Jan 2014 to June 2014 and my tenant moved in on 1 July 2014. I understand I can claim property depreciation (not the land) and that this would be straight line depreciation and I could claim 5.5 months (5 months and 1/2 a month for July); however, my question is, am I required to? I read that if I claim depreciation for say the next 3 years and then sell the house, the IRS can "tax" that and or recoup those costs when I sell. I just don't want to have lower taxes now and "lose" money when I sell in a few years. Any advice?
Yes, you must claim depreciation.
Technically, you are not required to claim it. But you are required to "recapture" depreciation allowed or allowable when you sell the property, in the future. That is, you will pay tax on the depreciation, when you sell, whether or not you actually claim it while you were renting it out.
what happens if I officially have my place ready to rent in June and nobody moves in until Oct all same year? Should I indicate that I started using it for business in June or Oct?
I am in the same situation. I am trying to understand what depreciation is and how this will affect me when I sell the house in the future. The information above clear some of my questions and if I understand right, I can take advance now and deduct the depreciation of my house while this one is rented or not do anything (not take advantage of this) . No matter what I chose I will have to deal with depreciation when I sell the house, right?
The part I don't fully understand is how exactly is going to affect me when I sell the house. For example, if I rent my house for 3 years, then move back and live it (make it my primary house) for 2 years before I decide I want to sell it, what the impact will be when I sell it?Am i going to pay taxes for the depreciation?