Thank you for your extensive answer to my question Champ. So, if I'm understanding you correctly to determine the basis for depreciation, I use either the purchase price of the property plus any improvements made or the FMV "as of the date the property is placed in service, minus the value of the land, whichever is lower".
In this case, we purchased the property in 2015 as a foreclosure for $220.5K , most likely under market value. We put about $40K in to the improvements and so have a cost basis of $260.5 K as of 2019 (the date placed in service. According the county assessor, tdhe value of the land at purchase was 40% of the total RMV. As of 2019 it has increased to 46% of RMV!! Both percentages seem way off base, especially since our real estate market here has exploded and as of 2019 the RMV of the property has doubled. Since the cost basis at purchase is much lower than the FMV at the date placed in service I am stuck with using that value. What I'm wondering is am I obligated to use the county assessor's land valuation to determine the basis for depreciation?
