Yes, you can report the property taxes and insurance as a rental expense for the land that is rented, reported on Form 4835. Because your property appraisal includes both the home and the land, you would need to use only the value of the land to calculate the percentage.
Here's an example:
- Total Appraisal: $100,000
- $80,000 for home & improvements
- $20,000 for land (12 acres)
- Farm rental: 3 acres
- Rental percentage: 3/12 = 25%
- Value of rented land = $20,000 x 25% = $5,000
- Percentage of farm rental in total appraisal = $5,000 / $100,000 = 5%
Because property tax bills and insurance are typically not split between residence and land, 5% of those expenses would apply to the farm rental. (If they are reported separately, 25% would be for the land rental.)
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