look at form 8582. under code section 469, except for real estate professionals, real estate rental activities are passive. current deductibility of these passive losses can be limited to zero if there is no active participation in this activity or if your modified adjusted gross income is over $150,000 ($75,000 if married filing separately).
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with all this rapid depreciation, losses in future years as long as the rules don't change will also be subject to non-deductibility. The only way to get the benefit of these suspended losses is either to have income from the property or to dispose of the property in a fully taxable transaction which would result in depreciation recapture 1245.1250. if you do a 1031 exchange any suspended losses will carry over to the replacement property and so will the depreciation previously taken on the exchanged property. the point is rapid depreciation can put you in lower tax brackets initially, but as it decreases you can be put into higher and higher tax brackets
