That's what I have always done, but I have not used the new "carry forward basis" to calculate the depreciation on the replacement property. In years past, Turbo Tax said to print out the 8824 for your records so that someday when you sell the replacement property you would have the "adjusted basis" to use when calculating the gain. If I use the new basis for the replacement property, my depreciation is wipe out, and that is one of the major advantages to owing rental properties, and someday when I go to sell I would have to recapture that in the gain (using the basis from the last exchange) and possibly defer that in the next exchange as long as the numbers work. For example, property cost $180K, but the adjusted basis resulting from the exchange deferment is $42K. For simple purposes say the structure is $140K (78%) and would be depreciated over 27.5 years, or $5,091/yr. If I use $42K as the cost the annual depreciation would drop to $1,191; obviously a huge difference.
This is consistent with the instructions under "learn more" when entering the cost.
