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Unconstitutional Patriot
Join Date: Apr 2000
Location: volunteer state
Posts: 5,620
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If you reduce the value of the improvements and subsequently, the depreciation taken each year, then you certainly do reduce the Section 1250 gain, but you also give up the depreciation deduction in yesterday's dollars. In some cases, it's better to take high deduction in say 1980 dollars and pay 25% recapture in 2006 dollars.
ld, I think your depreciation basis cannot be adjusted retroactively. If you took $500k in past depreciation, that's what your upcoming tax return will state, and what your upcoming tax bill will be based upon.
1031 sounding better, eh?
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