How to calculate annual depreciation for a replacement property after 1031 exchange

[user17583998547]

I did 1031 exchange in mid-2024 for the first time.  How do I calculate annual depreciation amount for the replacement (new) property?

I understand the replacement property will carryover the adjusted basis from given up property plus any additional excess basis for the new property.  

For instance, let's say, the carryover basis is $300,000 and Excess (Additional) basis is $100,000.

Do I add them up and divide by 27.5 years?  (i.e. $14,545 annually)

Some sources say use the same depreciation as before with given up property  (let's say it was $5,000) for the remaining years (my case was 8 years remaining out of 27.5 years) plus new additional basis for 27.5 years.  But that's awfully low amount to deduct...

In addition, I don't need to consider any building vs land ratio for the replacement property?

Thank you in advance for your help!

[AmeliesUncle]

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@user17583998547 wrote:

Some sources say use the same depreciation as before with given up property  (let's say it was $5,000) for the remaining years (my case was 8 years remaining out of 27.5 years) plus new additional basis for 27.5 years.  

In addition, I don't need to consider any building vs land ratio for the replacement property?

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That is correct.  You continue to depreciation the original amount of the old property, using the original placed in service date (so you will get 8 more years).  As a second asset, you enter the 'extra' amount paid ($100,000), using the new placed in service date.

Land needs to be considered.  The two pieces that I mentioned are based on the building itself, after the cost of the land has been factored in.

[user17583998547]

Got it. Thank you!