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I disagree - I believe your cost basis does indeed get adjusted downward by the amount of the depreciation allowance (whether you claim the deduction or not), and hence, to the extent your property is a business, it is depreciating, and your cost basis is adjusting downward. Holding the property till the total depreciation equals purchase price does nothing (first, because you don't depreciate teh value of the land, which is part of the purchase price, but only the value of the structure on the land), and second, because your recapture still occurs to the extent that your sales prices exceeds your "adjusted cost basis" (cost basis minus accumulated deprectiaion).

You're stuck. you will recapture teh depreciation at some point in time, so you might as well take the deduction.

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