A tax-free exchange may be advantageous in the case of land. Land is not depreciable, but it may be exchanged for a depreciable rental building. The exchange is tax free and depreciation may be claimed on the building. However, be aware of a possible tax trap if you exchange rental property for land and the building was subject to depreciation recapture. The recapture provisions override the tax-free exchange rules. The “recapture element” will be taxable as ordinary income.