How do I calculate my land value and improved value for a condo? When I go to the county's assessor's website the total value is about $21K, but my FMV is about $300K.

Forum|Forum|7 years ago
June 1, 2019
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If you are placing your Condo into use as a rental property, the basis should be the lessor of

Your adjusted basis in the property, which is cost + improvements - any reason you took a tax deduction on the property value (less common), OR
FMV of the property when you started using it as a rental.

If you are required to use FMV because it's lower than your adjusted basis, then you allocate the land value proportionately based on the assessor's value. For example, if the FMV as of the time you began renting the condo was $300,000:

If the assessor's website shows total value of $21,000, with land = $5,000 and the home = $16,000, then the value of your land = $5,000/$21,000 = 23.8%
Land = $300,000 * 23.8% = $71,428.57 and the Building = $300,000 - $71,428.57 = $228,571.43

For this information at the IRS website, please refer to page 7 at the following IRS pub. https://www.irs.gov/pub/irs-pdf/p527.pdf

Anonymous

Answer

If you are placing your Condo into use as a rental property, the basis should be the lessor of

Your adjusted basis in the property, which is cost + improvements - any reason you took a tax deduction on the property value (less common), OR
FMV of the property when you started using it as a rental.

If the assessor's website shows total value of $21,000, with land = $5,000 and the home = $16,000, then the value of your land = $5,000/$21,000 = 23.8%
Land = $300,000 * 23.8% = $71,428.57 and the Building = $300,000 - $71,428.57 = $228,571.43

For this information at the IRS website, please refer to page 7 at the following IRS pub. https://www.irs.gov/pub/irs-pdf/p527.pdf

chitownrollaAuthor

Level 2

Thank you. That is how I was going about it.

Carl

Level 11

The tax bill value is not used on your tax return at all. The program only uses tax values to determine what percentage of your cost-basis is applied to the land value. That's it.

If your tax bill shows a total value of $100,000 and a land value of $25,000, then 25% of the total value is allocated to the land.

So if you paid $300,000 for the property, then 25% of that $300,000 is allocated to the land.

In the program you would enter $300,000 in the "COST" box, and enter 25% of that ($75,000) in the "Cost of Land" box.

This is assuming that what you actually paid for the property when you originally purchased it, was less than the Fair Market Value at the time you placed the property in service. Now-a-days, it is more common for the price you paid to be lower than the FMV.

Critter

Level 15

Condo's don't usually have a land value because you don't really own the land individually ... the HOA owns the land ... so use a zero basis for the land.

abaldman

Level 2

@Critter - I'm hoping you can help me figure this out. You said in a previous comment:"Condo's don't usually have a land value because you don't really own the land individually".

I am having confusion over determining my cost basis for a condo rental I own. For some reason in my county, the land value is 72% of the total value of my condo (according to my tax bill). That seems odd to me. So little is dedicated to the building. So that lowers how much I can deduct for depreciation.

So you are saying I can start with the original purchase price as my cost basis? So if I bought it in 2010 for $205,000 that would be my basis plus any other improvements I have made (and other allowable closing costs, etc)?