Calculating depreciation without a breakout for land vs bldg/impr

7 Replies

I bought a short term rental property in Walton County Florida. My property tax assessment doesn't show a breakout for the land vs building/ improvements. I've used that breakout to help calculate depreciation on my California properties. I'm a bit confused on how to handle depreciation on this one. Any ideas? I'll talk it over with my CPA closer to filing time, but I'm curious for some insights now if anyone can share.

Thanks!

Originally posted by @Jane Hankins :

I bought a short term rental property in Walton County Florida. My property tax assessment doesn't show a breakout for the land vs building/ improvements. I've used that breakout to help calculate depreciation on my California properties. I'm a bit confused on how to handle depreciation on this one. Any ideas? I'll talk it over with my CPA closer to filing time, but I'm curious for some insights now if anyone can share.

Thanks!

Any reasonable methods would be accpetable. Just do not be too greedy :). 

Promotion
Guaranteed Rate
Guaranteed Rate is a top mortgage lender
Save $1,290 on your next home – no lender fee*
Get special perks like $1,290 in lender fee savings when you buy a second home with Guaranteed Rate.
Apply Now

@Jane Hankins check the county assessor's site for the tax assessed land value as a basis to start with, which will almost always be lower than the actual land value.  Then check recent comps for the sale of vacant lots in the area, similar in size and location to yours, with the same zoning.  The fair value to use for your purposes should fall somewhere in the middle of those.  And as @Ashish Acharya mentioned, it's always best to be conservative and avoid greed.  

You can utilize several options. 

If the assessor really doesn't have any type of split- you can use the land value per the appraisal would be the next easiest option. 

You can also have a realtor pull land value comps to utilize. 

Those would be the easiest things to use- you're not allowed to just say "eh 80/20 split" like lots of people liek to do. That's not a real method and won't hold in audit.

Originally posted by @Jane Hankins :

Thanks @Natalie Kolodij! I just phoned the assessor's office and was provided the split. I assumed if it wasn't captured on the bill, it wasn't available, but I was wrong. Thanks for the help. Looks like I'm at a 34/66 split.

 Now make sure you apply that same ratio to what you paid + capitalized purchase costs. 

Don't use their actual values - just percentages. 

Good job calling to followup!