My property tax notice only gives me Fair Market Value and Assessed Value (which are the same number). It's about $140,000 less than I paid. Also, it DOES NOT give me any land value. What should I do?
While I have heard of this, it seems to me to be rather rare for a property tax bill to not have separated tax values. I've seen where they have total value, and then a separate value for the structure. Usually, anything of value on the land is referred to on the tax bill as something like an "improvement value" or the such. Simple math gives you the assessed value for the land.
I've also seen the reverse where the tax bill gives total assessed tax value and separate value for just the land. Again, simple math gives you the assessed tax value for the structure, sometimes referred to as "improvements".
The assessed tax values are not to be used as the value for depreciation. The program will ask you for tax values only for the purpose of determining which percentage of your original purchase price gets applied to the land, with the remainder applied to the structure for depreciation.
When placing a rental property "in service" depreciation is based on the "lesser" of what you originally paid for the property, or it's FMV on the date placed in service. Typically, what you originally paid for the property will be the lesser value, and is what gets used for depreciation.
Note also that what you originally paid for the property can also include what you paid for any property improvements before the property was placed in service as a rental. But still, that value will most likely still be lower than what you would get for the property at FMV if you sold it.
