I bought a house, land was worth more than the house, based on county appraisal district. TurboTax is giving me an error and not allowing any depreciation.

[kjm]

This is in a part of Houston where houses are old and being torn down and rebuilt. Houses are being sold based on the value of the lot, not the house. How do I deal with this in TurboTax? Do I just ignore the warning, or do I need to move some of the land value to improvement value?

[AmandaR1]

You can't depreciate land, ever. You should allocate your purchase price based on appraisal values and some of your purchase price should be the cost basis in the home. Regardless of how small this amount is, you'll be able to take depreciation on it. I presume it can't have a negative basis, is that what's happening? Let me know more details if this doesn't answer your question. 

[kjm]

AmandaR, I am not trying the depreciate the land. When I bought the house, the improvements were valued at about $40K and the land was valued at about $360K, and I bought it for about $400K. When I enter $40K for the improvement value and $360K for the land value, TurboTax calculates $0 depreciation and gives me a warning.

[kjm]

I figured out what I was doing wrong. Instead of entering the amount I paid for the house, I was entering the improvement value of the house.

[AmandaR1]

Great!