Avoiding rental depreciation recapture from year with net loss

[Nicholas Berndsen]

I own a house which I have rented for 2 years. My tenants moved out in November 2015. I will sell the house in April 2016. The property is still considered a primary residence by the 2-out-of-5-years rule, so I will only owe capital gains taxes on recaptured depreciation.

In 2015 I made a profit and will depreciate that year up to the limit. No problems here.

However from January 2016 until when I sell it, I will have no rental income and therefore operate at a loss. Since I have no other sources of passive income, depreciating the property during those months saves me nothing. The catch is that when I sell the house, the IRS says I have to recapture all allowable depreciation, regardless of whether I actually claimed it or not.  That means I get taxed on depreciation I could not take.

Is there any way I can avoid this?

Two ideas come to mind. I am not sure if either would work:

1. In 2016 I could not consider the property a "rental property" anymore. Maybe a vacation home or something?
2. Is there I way I can deduct rental losses from 2016 against rental income in 2015? This would benefit me via depreciation and also all my other carrying costs in 2016.

Thanks in advance for the advice!

Nicholas