We did not claim rental house depreciation for last 12 years, and now we are getting ready to sale the property. what should we do? can we reclaim the depreciations?

[tagteam]

You need an in-person consultation with an experienced tax professional for guidance and tax return preparation. 

Not claiming any depreciation on for profit rental real estate would be considered an impermissible method of accounting. Changing to a permissible method would require filing Form 3115, which is complex and not a do-it-yourself endeavor. 

See https://www.irs.gov/instructions/i3115#idm140516454146256

Please seek professional assistance for this matter.

[Anonymous]

if you don't get professional help and correct your accounting method.  here's what will happen for tax purposes.   

your gain will be the sales price less costs of sales less cost of house, including improvements) and land plus the depreciation you should have taken for the 12 years  which would be about 40% of the cost assigned to the house.  you will end up paying taxes on that 40% as section 1250 recapture.   + capital gains tax on the balance.of the gain.

[BentseAvis]

thank you for your reply to my question.

it is hard to believe, but honestly, I didn't even know I could claim depreciation on my rental for last 12 twelve year. just found out yesterday that doesn't matter I claimed it or not when sell the rental house I have to pay 25% tax for these depreciations that I spoused to take. does not seem fair, but guess I have to deal with it.