Having gone through this interesting comments and generally agreeing with everything said so far, I would just like to add that loss at disposition of income property is not always bad. This is because the all the gain is not treated as capital gain --- the portion of the gain attributable to accumulated allowable depreciation is treated as ordinary gain ( at your marginal rate ) any remaining gain is treated as Capital gain. At the end of the day what an investor in real-estate should be looking at after tax return.
On one of my 1031 exchanges ( land with large gain ), the received property ( rental property ) when finally disposed of gave me a small gain before considering suspended losses, resulting a small loss -- and hence there was no depreciation recovery required and I ended up making a reasonable return on my original investment ( on the land )
I am now not so convinced that 1031 exchange is a good idea , especially in high priced California property -- the market movement is too much over a 10 year period -- that is my two cents
