Foreign property and potential benefit if I depreciate

Forum|Forum|1 year ago
May 22, 2024
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I have a foreign property in my home country in Europe which I'm currently renting. My question is: is it really beneficial to start depreciating for the 30 years allowed? If so, what if after a few years of renting it I decide to live there by myself, or if I pass it to my children. If the benefit of depreciation is not sufficiently great it seems easier to not depreciate.

Thank you

Ask the Experts - Biz Tax - May 2024

drc845443

Depending on your income level, the depreciation deduction that you claim for your rental property may help to reduce your taxable income and the taxes you pay in the current tax year.

For high income taxpayers the depreciation deduction may result in suspended losses, which you carry forward from year to year until you either eventually sell the rental property or your rental property becomes profitable.

Another thing to consider is that, at the time, you sell the property, the IRS will expect you to recapture the depreciation that you were entitled to deduct, regardless of whether you claimed the deduction or not. For that reason, I recommend claiming the depreciation deduction even if you do not see a benefit in the current year.

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