My client rented one part of the house and lived in the other. few years back he sold the entire property and invested in a 1031 exchange DST consisting of multiple stores across 4 states. By the time of this exchange, the relinquished property had been completely depreciated.

The relinquished property was not completely rental since he lived in one part of the property.

for purpose of simplicity using these figures:

year of purchase of old property = 1992

1031 exchange done in 2021

original cost of old property = $100,000 

rental portion = 40% ($40,000)

sale price of property = $600,000

What would the depreciable basis of the new DST be?

This is my first time handling a case of DST with no depreciation calculated since the exchange.

Highly appreciate any guidance.

Thank you.