However, if could backfire if your rental property's value drops. Here is an example.
You bought a rental house for $105,000 and hold it for 5 years.
The building is worth $85,000 and you claim your depreciation cost of $3,000 per year. In five years, your total depreciation claim is $15,000.
This reduces your cost basis to $90,000 (=$105000-$15000).
Now if you sell your property at $95,000, even you have lost money (because you paid $105,000 for the property but sell it for only $95,000), you still have to pay tax now for the $5,000 gain over your new cost basis of $90,000.