Technically you own a share of the common land.
Part of the value for the condo includes being on that property.
When you allocate the land portion, only the condo will be depreciated.
For example, value is 250,000.
If you value the land at 10,000, you will be depreciating 240,000 over 27.5years.
When you sell, say for 320,000, you will again allocate part to the land.
If you only allocate 10,000 to the land when you sell, you will also "recapture" depreciation you took on the condo over the years. lets say you claimed 60,000 in depreciation.
(you don't have a choice, you cannot elect to not claim depreciation, it always needs to be recaptured, or "paid back")
How the land is valued could make a difference when you sell.
You can use your share of the assessed tax value of the land.
Example one:
So sell 320,000
10,000 to land (no gain no loss)
310,000 to condo (310,000 - 240,000 = 70,000)
60,000 depreciation recapture (reported and taxed as ordinary income)
10,000 Capital Gain
Example Two:
Say the area encountered something that made the land value rise more than the building-
So sell 320,000
25,000 to land (15,000 capital gain)
295,000 to condo (295,000 - 240,000 = 55,000)
55,000 depreciation recapture (reported and taxed as ordinary income)
You would have more capital gain and less ordinary income
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