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On the surface a 1031 exchange seems like a no brainer if someone is selling property and buying a qualified property.

However, it seems that if I use a 1031 exchange my accelerated depreciation on the target property will be less.

How can I calculate the comparison?

My interest in avoiding the 1031 exchange if there is not enough difference is that I would need to find a seller that will cooperate with me and that will lower the number of target properties I can consider.

[EDIT] You basically need the cooperation of the seller of the target property because of the tight deadlines between time to sell the property to when you can close on the target property. It may seem like the seller should not care but we would need to make an offer on the target property with a contingency to sell the source property. Obviously a seller would prefer offers without a contingency.

[EDIT] The accelerated depreciation is not on the building; it is done by a firm that specializes in identifying the part of the property that qualifies.

[EDIT] I want to do this myself on my own spreadsheet so I can do it on prospective properties without waiting for my accountants to do the calculation. I also want to understand the calculation so I can develop an intuition for what properties make the most sense for me.

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  • You cannot use accelerated depreciation on a building, how is it relevant?
    – littleadv
    Apr 9, 2022 at 19:34
  • Also, what cooperation in particular do you need from the seller? The seller doesn't care where the money comes from.
    – littleadv
    Apr 9, 2022 at 19:35
  • So if you're hiring accountants to do the cost segregation analysis, surely they can also do the tax benefit analysis, can they not?
    – littleadv
    Apr 10, 2022 at 8:28

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