Can co-ops/condos depreciation be tax-deducted?

Not your primary residence.

>I have read literature

Please provide your link.

Yes, if it's purely a rental property: http://www.irs.gov/publications/p527/index.html

If you live in it, you pay capital gains tax on any profit when you sell, but don't get to deduct any losses.

"you pay capital gains tax on any profit when you sell"

Capital gains that exceed the $250K/$500K exclusion, of course.

A good little mini-primer about capital gains on the sale of your primary home:

http://www.nolo.com/legal-encyclopedia/avoid-capital-gains-tax-selling-home-29901.html

First, you can't depreciate a home you live in; only an income-generating property, or a part of your primary residence that you use for business purposes.

Then you can only depreciate the building portion; land cannot be depreciated.

Then if it is an income property you pay no capital gains provided that you reinvest the proceeds in another income property.

Then if you depreciate part of your primary residence as a business expense, or stop reinvesting the proceeds from investments, you have to recapture all of the depreciation when you sell.

For example, if you have a home whose non-land portion is worth $100,000, and depreciate 15% of it per year as a business expense over 28 years ($15,000 depreciated over 28 years), but sell the house for $200,000 (non-land portion), you would have to recapture 15% of $200,000 ($30,000) over the number of years you depreciated the property for.

So if you depreciated the property for 10 years, you would have depreciated $5,357.14 ($15,000 / 28 * 10), but when you sell for $200,000, you will have to recapture (and pay tax on) twice that amount.

It's not usually worth the expense.

Only the secondary home , if it's a rental

What is the reasoning behind allowing only rental property to depreciate but not the house you live in?

Because owning your residence isn't a business.

If the IRS was to consider it as such, then it'd have to tax us on the rental value (less maintenance, depreciation, and all the other costs.) We spoiled subsidized owners wouldn't want that.

stevejhx, where does the "twice that amount" come from?

Generally speaking, taxpayer may depreciate property if the:
1. Taxpayer has title to the property
2. Taxpayer use the property in a business or trade, and it is income-producing
3. Property has a determinable useful life
4. Propety is expected to last more than a year.

Condos use for (2) fit the category, meanwhile "tenant/shareholders can depreciate stock in a cooperative housing corporation (to the extent their apartment is used for business or investment) even though the corporation, not the tenant, owns the building."

Here it the IRS link:
https://www.irs.gov/pub/irs-pdf/p527.pdf