1031 exchange from depreciable property to vacant land

[Ron C.]

I have done a lot of google searches and how I came to this web site.  Some answers but still confused.  Here is my situation:

We own a rental condo that has been in full time rental for a number of years and took depreciation.  Paid cash for it when purchased no mortgage.  We are considering a 1031 exchange to buy some vacant land around our home that could be developed.  The land would probably be at least $100K less than what we sell the condo for and less than what we paid for the condo. From my understanding, the IRS will collect the recapture tax since the exchange is from a depreciated asset to a non depreciable one, so I can't defer recapture.  That would leave only the balance taxed as a capital gain to defer, but since the replacement property is less than our original capital investment (purchase price?) they will also fully collect the capitol gains.  I am right on this analysis or what am I missing?  Thanks, learned a lot here.