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I know we can't take any sort of deduction for the rental property,...

I am pretty sure you have to depreciate the property. The gov't will assume you do so and go to recapture it even if you don't. No doubt someone will correct me if I am wrong. I always thought that was a strange one.

In fact, even though it's such a good deal, the IRS actually requires you to claim it, whether or not you want to.

...

The real reason to claim depreciation is that the IRS will charge you recapture tax as if you depreciated your property, whether or not you actually did.


http://homeguides.sfgate.com/tax-implications-not-charging-d...

IP
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