I bet he does not have 10K net rental profit

if he does, it does not make sense to 少報 depreciation (as he has to pay more tax now in exchange for low capital gain tax later - who knows what will be the capital gain tax rate later? - or he might want to convert back the same property to primary home some time later.  Or maybe he just loves to pay more tax now!)

If he does not have  net rent profit before depreciation (if he has a big mortgage, that will be the case) , and if his income bracket (MAGI) is over 150K, then the depreciation can not be used for saving tax for the year, it will only be allowed to carry over into the future. That is usually the situation that preople want to 少報.

However, in theory, the only way to 少報 depreciation is to lower the starting cost base. This has limit too because you have to prorate the land/improvement value based on some acceptable methods - like county appraisal.

Once the depreciation starts, you normally can not change it (unless there is a major change in property). Every year, the ratio is 3.636% (starting from 2nd year, 1st year is prorated depending on date in service).

This ratio of 3.636% is fixed.

So if you DON'T take depreciation or 少報 depreciation (using a lower ratio), IRS still regards as if you are taking 3.636% - and it will calculate the final capital gain based on what the rules says, not what you reported. 

The net effect is that you could (partially) lose and waste some depreciation benefit.

所有跟帖： 

• There is no point of noto not reporting! -wooddiy- ♂ (288 bytes) () 04/12/2012 postreply 09:42:00

• True, I don't say an "option" -beachlver- ♂ (263 bytes) () 04/12/2012 postreply 09:47:34

• this is an issued about depreciation allowed or allowable -changjia- ♀ (1049 bytes) () 04/13/2012 postreply 15:56:43