Depreciations and tax benefits

[Craig Ts]

All,

Need help understanding personal income tax benefits of SFR depreciation, would be great if you can comment:

Lets say one is not a real estate professional then, AFAIU depreciation (straight line or cost segregation based or bonus depreciation) in addition to other expenses like interest, management etc, can be used to offset against passive income for that year. 

If the person does not have as much passive income as to offset depreciation (and other SFR related expenses) fully, losses are carried forward to next year.

But if one sells this property lets say after year 10, then depreciation is recaptured and tax basis for property is adjusted. So forward carried losses have no value ?

If there is not enough passive income in current tax year to offset with depreciation, is there a benefit of taking bonus depreciation ?

[Natalie Kolodij]

Originally posted by @Craig Ts:

All,

If your income is under a certain income limit you can utilize those passive losses to offset regular income (w2 wages). 

Otherwise they carry forward each year. 

When you sell a property any losses that have built up related to that property are "freed" up. So you can use them in the year the rental is sold.