Hi, I am adding a rental property to my income taxes this year. I am confused and would appreciate any help in this topic:
Enter Property Tax Values
Use the values listed on your property tax bill to find this information. Your property tax bill may not show reliable assessed values if you've recently purchased a newly built house or made improvements to the property. If your assessed values don't reflect the full value of improvements to your property, you can still use the assessed land value.
However, you should enter the value of the improvements based on your cost for the portion of the property, plus improvements you added after purchase.
If you do not have your property tax bill, use the values listed on your insurance records to find this information.
Land value ____23,000______
Improvements value (includes buildings, structures, fences, decks, etc.) ______?______
My question and confusion is about the amount to enter for the buildings, structures.
- I have the values listed on my tax bill which is $23K for Land and $31K for building structures.
- I have spent $85K fixing up the property (improvements).
- I have the property insurance on the property and it's $385K for Dwelling replacement.
Which amount do I use? If I use the cost plus improvements it's ($85K) plus what I paid for the property that is a total of $108K ( I did not include the land value). If I use the values listed on my Property Insurance Policy ($385k) it is almost four times higher then the cost plus improvements. They give the two options, which one should I choose?
Thank you
