Is It Mandatory to Take Depreciation

In the case of a residential rental property, the IRS considers its useful life to be 27.5 years, and writing it off over that period of time is mandatory. Land can’t be depreciated, because the IRS considers it to be useful for an indefinite period.

Is taking depreciation mandatory?

Depreciation is a mandatory deduction in the profit and loss statements of an entity and the Act allows deduction either in Straight-Line method or Written Down Value (WDV) method.

What happens if you don't claim depreciation?

You should have claimed depreciation on your rental property since putting it on the rental market. If you did not, when you sell your rental home, the IRS requires that you recapture all allowable depreciation to be taxed (i.e. including the depreciation you did not deduct).