I have been deducting Mort Interest from my rental property income and claiming it as income on my personal taxes. However, using it as an expense means I cannot use depreciation because I'm not making a profit on the rental property. Can I legally stop paying myself mortgage interest (I financed the property purchase myself) and show a profit on the rental to use the depreciation to lower my taxes?
No. You are required to take depreciation. It is a mistake to avoid taking depreciation because, when you eventually sell the property, you will be required to "recapture" depreciation allowed or allowable. Bottom line is that you will be paying tax on the depreciation, even if you do not claim it.
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