let's say a house was brought for $500,000 back in 2000.
current property tax bill from 2022 say land value is $20000 and improvements value is $490000.
In one area of your response, you use a figure of $20,000 (twenty thousand). In another you state $200,000 (two hundred thousand.) I'm going to assume you mean the latter of $200,000 (two hundred thousand) for the land value on the tax bill, and that you simply left a zero out in what I pasted above.
I do the math a bit different. But still arrive at the same end result.
From the tax bill: 200,000 plus 490000 equals 690000. If 200,000 is land value, then 200000 divided by 690000 equals .28.9 or 28.9%. It's fine to round to the nearest whole number. So we'll say that 29% is allocated to the land with 71% to the structure.
For the actual purchase price of $500,000, 29% of that is 145,000.
So in the COST box you'll enter $500,000 and in the COST OF LAND box you'll enter 145,000. Then the program (not you) will do the math to arrive at a cost basis of $355,000 for the structure. That is the amount that will be depreciated over the next 27.5 years. Those numbers will *never* change under any circumstances, for so long as the property remains under your ownership and classified as a rental.
