Is it mandatory to claim rental units depreciation in my income tax?

My wife does not want to claim depreciation, because that way when we sell the property in the future the capital gain will be less.

The question is then, is it mandatory for tax purposes that we need to depreciate the rental unit?

I have not been able to find the answer to this anywhere.

Thanks

Professor V

It is not mandatory that you claim depreciation. However, the law mandates that you reduce your tax basis in the property by the amount of depreciation that you could have claimed, whether you actually claimed it or not.

Thank you for your response.

Based on what I understand of what you said, it would be foolish not to take depreciatoin, because the cost basis would be reduced anyhow.

Let's take an example, so that my wife can understand it, please.

Say, that we bouthg a rental unit for $100,000. Let's say that I use the straight-line method (27.5 years). Let's say (for sake of discussion), that we sell it in 27.5 years from now. If we sell it for $300,000 then the capital gain will be $300,000, not $200,000 as it was totally depreciated.

Is that alright what I am saying?

Your feedback is greatly appreciated so that I can convince my wife that it would be foolish not to take the depreciation.

Professsor V

ProfessorV: Based on what I understand of what you said, it would be foolish not to take depreciation, because the cost basis would be reduced anyhow.

That is correct.