Sansa Stark is looking for the most beneficial way to renovate Winterfell. As you know, Winterfell is located in Alaska and she looking to save on taxes. She is willing to invest $5,000,000 into structural and interior work on the castle. She is looking to you to explain how best to deduct the $5,000,000, which would give her the most depreciation/expense in the current year. The castle is a trade or business for depreciation purposes.

In addition to the renovations to Winterfell, Bran Stark has asked Sansa to exchange Pyke Castle (owned by the 6 kingdoms) for some land south of the Wall owned by the Starks. The 6 Kingdoms have a basis in Pyke Castle of $2,000,000, where the FMV of the Castle is $2,500,000. The FMV of the land south of the Wall is $3,000,000 and the Starks have a basis of $1,000,000. Sansa has agreed to the transaction but really wants to understand the tax consequences. All tax rates will be at the individual rates for both ordinary and capital gains income.

Please advise on the most tax efficient and the most tax inefficient manner to make a swap of the two pieces of real property.