You can lower it to the bottom of the smooth portion. Do not let the bottom of the clamps go past the smooth portion. I marked a red arrow on the photo below.
Below copied from a previous post I made last year copied from here.
If you have a triple tree front stand (the kind that has a pin) and lifts the bike by the bottom of the triple tree like the photo below, it makes the lowering of the front a breeze if you have two people.
It literally took us 5 minutes. See Warning Below!
I used a stand like above and slid a 2X4 under the front wheel and made the 2X4 a lever to hold the wheel from dropping when my buddy loosened all 6 fork clamp screws. After they were all loose, I easily lifted the forks up to the new location with the 2X4. While I held in place, my buddy tightened up the fork clamps and we were done! If you do not have a front lift that uses the triple tree pin and a helper... DO NOT USE MY METHOD OF LOOSENING ALL THE FORK CLAMP BOLTS OR YOU WILL DROP YOUR BIKE ONTO THE FRONT FENDER!!!
If you do not have a front stand with pin, follow Speedy's instructions to lower the front.
Inspect your chain slack after lowering the rear,
mine got tight and I had to adjust the tension per the owners / maintenance manual. This was my first chain driven bike so I had a little learning to do but it was not bad at all.
FYI if you adjust chain tension, you will need new cotter pins (5/32 X 1.5" Lowes has 'em) as well as a 22mm and 27mm socket for the rear axle bolt as well as two 12mm open end wrenches to adjust the tensioner screws.