@sunm98tt You are exactly right. The depreciation amount would be inflated if you added any amount to it and created a new asset. No overrides will be necessary or need to be tracked for future action if you follow the action plan below.
The depreciation asset for the property given up in the Section 1031 exchange remains the same without change. It must go forward for the new property as though it is the same real estate (you could rename it).
Any additional cash or funds paid in the exchange, above and beyond the property itself, is another and separate, distinct asset with the recovery period of 27.5 years.
For future tracking and records this is the simplest and most convenient way to move forward after a Section 1031 real estate exchange with the need to keep records of the exchange to show any additional funds paid for the new asset. The new asset will begin the depreciation recovery in the year of the exchange. The asset for the property given up keeps the same character with no changes.
TurboTax can handle this easily and your time factor can be significantly less for your tax return.
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