In addition, the difference between applying the unallowed losses now vs later to offset depreciation recapture is substantial.
Without using the unallowed losses to offset the depreciation recapture now, the cost basis for the new property is a lot lower. Coupled with the cost of land, it seems not right to have a tiny amount of depreciation of the property left. If I were to not do the 1031 exchange, I still have decent of property depreciation amount left.
Should the land value be adjusted some way to make this total depreciation amount more reasonable? For example, does applying a ratio based on property tax for premise/land to the total cost basis, or the difference in value between the two properties, make sense to do? or even the land value of the new property should be set to 0, because we are talking about cost basis and no land value has been in the calculation?
Thanks.
Keon
