You should consult your CPA regarding #3. Depreciation must be claimed based on standard depreciation tables provided by the IRS. If you don’t claim it, you lose it (“allowed or allowable” rule). Depreciation taken decreases passive income and/or increases your passive loss. If you sell the property, your gain is based on your adjusted basis (generally original cost basis + improvements – depreciation allowed/allowable). Assuming a net gain, you’d first recapture the depreciation previously taken as ordinary income and the rest of the gain would be capital in nature. Your passive losses carry forwards generated in the past years can be used to offset the depreciation recapture and (I believe) the capital gain. This is general info regarding the treatment and is not intended to be tax advice. Consult a CPA
