No land value for condo rental in Massachuestts

[kevin.s]

I have own a condo in Massachussetts that I rent out but the property tax bill has no land value. I called the town and they said that they do not have or calculate this value.

How do I calculate this value for depreciation purposes? As background the condo is part of 3 units. There are common stairways and a very little outside common space (just steps & short path in front of building and small area (~100 sq ft) with a a hedge and flowers)

Thanks!

[DoninGA]

Land is never depreciated.  Leave the land value blank (empty) when entering the condo as an Asset  

[kevin.s]

OK thank you. Just to be clear - it is acceptable to leave the land value as a blank? Wouldn't the IRS expect some land value in there even its just a minimal amount ?

[DoninGA]

The value of the land is not entered on a Form 4562 Depreciation and Amortization since it cannot be depreciated.  The IRS only needs to know the value of the residential rental property less the value of the land.  Since you have no land value there is no need to enter land value.  All of the condo value is being depreciated.  If the program will not accept a blank for the land value, then just enter a 0 (zero).

[Hal_Al · Accepted solution]

Here's a good explanation as to why the condo has no land value. Scroll down to Paul Cuputo's comment. "A condo is considered an air-lot". 

https://www.biggerpockets.com/forums/51/topics/420631-rental-condo-100-of-value-depreciable

In your case, the fact that the town does not assess any land value supports taking full depreciation, as the tax assessment is the primary method of allocating land. In your case, it's 0.

[kevin.s]

Thank you!

[Anonymous]

here's a scenario.  the developer bought the land from the owner.   then, at some point  transferred title to the HOA.  when he sold the condo's to the original owners, the sales price include something for the cost of land, the condo itself and profit.   the HOA pays the real estate taxes through the assessments.     subsequent buyers would acquire the same percentage interest in the HOA.  so the question becomes did the original owners and subsequent buyers actually purchase a undivided fractional interest in the land.  Laws differ by state.  

the mall is not a good example because the tenants generally have no ownership interest in the mall owner just a lease for the property and generally no ownership interest in the building.  That does vary because in some cases, the tenant will construct the building under a ground lease.     

so condo lessors can ignore the issue., maybe their right in that they have no ownership interest in the land    but if they want to be careful they should read the purchase documents to see exactly what they purchased.