Under the American dream of owning a home and taking care of it for years to come, most homeowners value the tax deduction for depreciation expense on their principal residence. Most importantly, this allows them to lower their taxable income each year by taking advantage of the limit on itemized deductions (the "adjusted gross income" or AGI).
ACE rules are adjusted annually for inflation, so that home values will continue to be deductible up to a certain limit. The following illustrates the applicability of ACE rules in 2019: If a home was purchased in 2019 with an original cost of $200,000 and had been used as your "principal residence" since 2018, then the total amount of depreciation allowable could be claimed (including Principal Residence Phase-Out) as follows:
If you were not able to use all your allowed deductions because you exceeded the phase-out threshold ($250,000 in 2018), any excess can be carried over and deducted in 2020. Furthermore,