Land or Structure Basis /Improvements?

[pkwags]

In determining my HO basis, are there other costs that are included in "Land" other than the original purchase of pasture?  Before the house was set, we had to develop the lot by adding a culvert, driveway, garage, carport, water & electric underground lines and septic, including grading concrete runners, a concrete pad and crushed concrete carport pad.  These items are normally part of the purchase of a developed lot, but I have seen conflicting information on whether they are added to the cost of the house & structures or to the land for basis and depreciation purposes.

Similarly, would improvements after HO starting service date be related to land or structures for sidewalks and grass around the dirt surrounding the buildings?  The IRS website indicated some land-type items could be said to have a limited time of use and could/should be depreciated, so are they not considered land (which cannot be depreciated) when filling out the Asset Form for Improvements?

It just seems like I'm getting inconsistent information, where sometimes items are lumped in with the basis for developing the "land", but not so later when additional improvements are done.  Is the definition due to development of land before building, and improving afterwards?

Also, if it's undefined and a free choice, it seems that including the land "development" to the initial cost of the house, garage and carport basis, could give reason for the county to increase my property tax on the buildings, that might be worse that the HO depreciation benefits to my income taxes. 

If there's a clear rule on what is defined as "land basis & improvements," I don't have to try and figure out if I'm making the right choices.  The IRS had determinations for big businesses, but not for home offices.  Examples related to Improvements (see below), don't mention them being land improvements, so do I use that as a guide for determining the initial basis, too?

Improvements

You paid for an improvement to your property if you spent money to enhance your property, restore your property, or adapt your property to a new or different use.

Examples of improvements include:

- Installation of new plumbing or wiring
- Addition of paneling to a room
- Installation of a fence
- Paving of a driveway
- Installation of new cabinets
- Addition of a new roof
- Assessments for streets, sewers, and sidewalks

[Mike9241]

it depends.   some could be part of the land cost and thus non- depreciable  - say you bought vacant land. the sidewalks are already there, that's land cost. say no sidewalks. you pay for them. that's a land improvement.

adding a culvert, driveway, garage, carport, water & electric underground lines and septic, including grading concrete runners, a concrete pad and crushed concrete carport pad. actually, these costs are their own category - land improvements which are part of the total basis of the property.   if the property is never used for business or rental, it doesn't really matter what category you put them in. if you sell those costs would be part of your total cost reducing your gain

now if the property is for business or rental I would suggest you review IRS PUB 946 and especially Table B-1 since they would likely be depreciable but have a different lifes than the building

https://www.irs.gov/forms-pubs/about-publication-946

[pkwags]

Mike, thanks for your reply. I was out of town until last night, so could not reply right away.

When you say it depends if it is used for business, do you mean if some land improvements are deductible when they are 100% for a business and irrelevant to the HO?

The IRS website clearly stated the HO basis is the total FMV of the house and all structures, including garages but not land, multiplied by the percentage of the square footage of the office vs the entire house, to be depreciated over 39 years.

With that instruction, I assumed anything remaining if a fire burned everything to the ground, would be classified as land and not depreciated.  So, I included everything in or on the ground that would be left, as land assets.  I figured those things create a "developed lot" (septic, driveway, culvert, pads, underground conduit & wiring).  I then read IRS category definitions that allowed such land improvements to be depreciated for businesses that improved and sold lots, and for big companies putting in parking lots for their offices and factories.

Then I read elsewhere on the Internet that HO land improvements with a life expectancy (sidewalks, septic, driveways, some landscaping) can be depreciated, making me question my entire basis division between home and land. Pretty much everything outside was completed before the house was completed prior to moving in; and we started using the HO 2 weeks later, but the drainage issues, grass and sidewalks were months later.

In TurboTax  do I use the HO Improvements Asset Worksheet for the sidewalk and include it all as Land, leave out the Land entry; or, do I use the basic Asset Worksheet, and if so, which asset category do I choose?

I just want to make sure I do it right since this is the first year.