MACRS Annual Depreciation

[Christian U.]

Hi All,

I currently only have one rental property, an SFR in Texas, that I've had rented for a few years now. When I put the property into service, I began to depreciate the property under the MACRS General Depreciation System (GDS). My annual depreciation is thus the cost basis divided by a recovery period of 27.5 years, with the first year of service being determined using the mid-month convention, as outlined in Pub 527.

This past year (2014), let's say I've managed to reduce my taxable income to less than 0, and I was wondering if it was possible to take less depreciation than the allotted amount? One might do this because they may flow a greater amount of income from their Schedule E, without paying taxes on that additional amount. This would then later reduce the tax burden upon sale of the property, as the total amount depreciated would be less.

Is this possible? Or is one always required to take the maximum amount determined by the MACRS GDS?

[Rob Beland]

You don't have to take the deduction @Christian U. but you do have to account for all allowed depreciation when the property is sold whether or not you took the deduction.