Doug wrote:
[...]
- quote -

25% is a *maximum* tax rate for unrecaptured section 1250
gain. The lower of 25% or your ordinary tax rate applies.

-Mark Bole

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Yes, the depreciation to be subtracted from basis is allowed
or allowable.

But I also agree with Ray, this is perhaps a silly part of
the tax code. The taxpayer is seeking to do something for
the sake of simplicity that will most likely result in him
or her paying missing out on a net tax savings. He or she
should be so permitted. This should be the choice of the
taxpayer.

Now, whether depreciation saves money may hinge on tax
bracket. Let me explain. Instead of the usual 15% capital
gains rate, depreciation recapture has a 25% capital gains
rate. Now, that will effect a net savings if you are in a
higher tax bracket (not to mention the time value of money).
But what if you are in the 25% bracket? Or, what if you're
in the 15% tax bracket, is depreciation recapture still
taxed at 25%? I suspect the answer is No, but I don't know
for sure.

-Doug

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"Ray" <rayj.balt[at]DELTHISverizon.net> writes:

- quote -

You have to do that whether or not your claim depreciation.
Your basis in the property is reduced by *allowable*
depreciation whether or not you claim it.

So by not claiming it you're shooting yourself
in the foot (or the wallet .

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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"Ray" <rayj.b...[at]DELTHISverizon.net> wrote:

- quote -

First it isn't the IRS it is the United States Congress
which requires basis to be reduced by depreciation allowed
or allowable. In other words, basis goes down whether
depreciation is deducted or not.

- quote -

Your daughter should deduct the depreciation she is entitled to.

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"Ray" <rayj.balt[at]DELTHISverizon.net> wrote:

- quote -

You're not really required to claim the depreciation. But
if you don't you will still be required to recapture the
depreciation that you could have taken when you eventually
sell.

Stu

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"Ray" <rayj.b...[at]DELTHISverizon.net> wrote:

- quote -

Claim the depreciation.
Don't be lazy.
If you don't, you'll kick yourself.

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"Ray" <rayj.balt[at]DELTHISverizon.net> wrote

- quote -

You'll still compute the gain on the sale based on the
depreciation you *should* have taken - so take it.

This may mean you have to file amended returns to claim the
depreciation.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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"Ray" <rayj.balt[at]DELTHISverizon.net> wrote:

- quote -

And when she does you'll learn that the recapture applies to
depreciation allowed OR allowable. IOW, she'll be taxed on
the depreciation whether she claims it or not.

You need to amend.

--
Phil Marti
Clarksburg, MD

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Ray wrote:

- quote -

Recapture in the US is incurred on depreciation allowed or
allowable, whether or not it was taken. You are thinking of
Canadian recapture.

You would be better off amending last year's return.

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My daughter got married in 2006 and began renting her
previous house in November.

I reported this rental income on Schedule E. I chose not to
report depreciation on the ground that we would have to
report recapture when she sells the house, probably within a
year or two.

But I ran across something in TurboTax which told me that
depreciation is REQUIRED by the IRS.

This doesn't make sense -- but then, a lot in the tax law
doesn't make sense.

Advice, please.

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