Depreciation Question for Duplex Deal

4 Replies

Hello everyone!

I'm analyzing a duplex deal in Los Angeles, CA, and I'm trying to estimate how much I'll be able to depreciate in taxes. For this, I obviously need to be able to separate land value from the building value. How is this done? The last time the house was sold was in the 1980's, so the assessed value was much less than market price today. I can't find a straightforward formula on the LA Tax Assessor website. Any help? Thanks!

Usually the tax assessor's office has a land value for the property you are considering. A realtor can probably get you a land value if you can't find it.  Deduct the land value from sale price and you have your depreciable amount.  Take the depreciate amount and divide it by 27.5 yrs and you will have the amount you can depreciate on a yearly basis.  

For example:  Sale price 350k, land value 50k.  300/27.5 =  $10,900 you can offset yearly income each year.  Cheers.

Our tax office assess each property each year.  Your's probably does too.  But if not, then look at what a home in the neighbored recently sold for and see what they assess the land.  If you have a CPA do your taxes or know a realtor, I am sure you can get the answer you need.  

@Kenan Heppe

You might be able to see a similar home in the neighborhood that was recently sold and see what building/land assessment was used to give you a rough idea.

However, I wouldn't think depreciation would be a determining factor if you should / shouldn't buy the house. Most likely a house in Los Angeles will have your taxable income be below $0 anyway.