To say that the “depreciation is tax deductible” is very misleading…
Your cost basis of the sold property is transferred to the acquired property. You do NOT get to write off more depreciation of the new property based on the selling price, (up to an equal amount) It’s still based on your original cost.
Eventually depreciation is recaptured and figured in cost basis.
By buying out of state, depreciation can be much better, as the land value is low in many places, sometimes only 15% of the assessed value, while in CA it can be 50% or more.
Doing a 1031 in that situation can be a bit tricky, but still should be able to be done.
