Can the owner do a 561 Exchange transaction if the property was recently purchased and has not really depreciated much?
A. Yes, however, if the property was purchased within 1 year of the date of the 561 Exchange transaction, the seller cannot use a 561 appraisal, but must use the purchased price to determine the value for the 561 Exchange. If the 561 transaction happens at least 1 year after the purchase, the owner may use a 561 apprasial to determine value, but the owner will not receive the full benefit of getting twice the tax advantage as described in the previous question. However, the owner may not want to wait 30 or so years to receive the full depreciation in order to receice twice the tax benefit.
