I would like to deduct the property taxes & insurance paid on my rental property, but would like to NOT take the depreciation deduction, as I am already not paying taxes & it would only cost me when I sell the house.
BTW, this applies to years 2014-2019. I have purchased TurboTax Premier for those years but have not filed tax returns. The gross income says that I have to file, but after deductions, I don't owe any taxes, so no reason to file!
I am now trying to catch up!
You absolutely should take the depreciation. If you sell for a profit, the depreciation recapture is levied WHETHER YOU TOOK IT OR NOT. So, please take it. If nothing else the passive loss will be an offset when you sell.
If I do not depreciate the property, then why & how would this non-existent depreciation recapture be levied? This makes no sense!
If you depreciate the property, this reduces the cost basis, & increases the gain when you sell it, not offset it.
Further, taking the depreciation for the years 2014-2019 does me absolutely no good as I already paid & owed NO taxes for those years.
Per the IRS:
Depreciation is a capital expense. It is the mechanism for recovering your cost in an income-producing property and must be taken over the expected life of the property.
The IRS takes the stance that you must depreciate the property. 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.
Sorry but Depreciation is NOT an OPTION it is a REQUIREMENT and if you do not take it you will be hit with the recapture later WITHOUT the expense to offset it on the Sch E ... so the only person you will hurt is yourself.
You can deduct suspended PALs when you sell the property that generated them. If you sell a rental property with suspended PALs, you may be able to deduct them on top of deducting any Section 1231 loss from the sale. Like Section 1231 losses, deductible PALs can offset other income and also create or increase an NOL that you can carry backward or forward.