In the US, when you look at any kind of rental property, you're looking at someone's tax shelter. There's a whole scheme to it all as a matter of public policy A person or partnership might start with a small block of rental units which can be depreciated over a period of time. Typically 27 years or so for residential property and 39 years for commercial property. To the extent that deduction has ben used up when they move up in the rental world, so to speak, by acquiring a larger property, they can so so by way of a tax free exchange to a larger property and then use the excess basis in that property for a new tax shelter. The carryover basis rules apply and it gets a little complicated, but to the extent the larger property is more expensive than the prior property, depreciation can continue.
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