Gene E. Utterback, EA wrote:
- quote -

The "supplemental" property tax bill that comes out when
there's a change in ownership WILL match the purchase price
(unless the assessor believes that there was a "bargain
sale" or something equally wrong with the value).

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Seth Breidbart wrote:
- quote -

Unless the land/improvement ratio is way off, a property tax
bill may show the allocation. He would use the
[supplemental] bill for the year of purchase.

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Seth Breidbart wrote:

- quote -

You would "estimate" it, the same as you would do with any
other kind of missing historical data (like stock purchase
prices, etc.). In my part of the country you usually won't
be far off if you allocate 20% - 25% to the land. Naturally,
if there is acreage or other special circumstances, you
would have to take those into account.

MTW

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Arthur L. Rubin <ronnirubin[at]sprintmail.com> wrote:
- quote -

Yup.

Dumb, dumb, dumb,. .... no idea why I wasn't thinking. Thanks.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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Seth Breidbart <sethb[at]panix.com> wrote:
- quote -

You've got it!

- quote -

Very often you can use the ratio of land/building that was
on the property tax invoice.

So while you might not believe the valuations on those
invoices, you can still use the ratios to determine land vs
building.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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Arthur Kamlet wrote:

- quote -

Real property is MM, rather than MQ.

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"Harlan Lunsford" <hnospamlunsford[at]bellsouth.net> wrote:
- quote -

I agree with my esteemed colleague, Harlan. Land is not
depreciable so you can't depreciate land. You bought the
property for $75K which I assume included the land it sits
on. So take that $75K and subtract the value of the land at
the date of purchase - if necessary you can go to your
county treasurer's office and ask them for the real estate
tax assessment from when you bought the property. This
likely won't match your purchase price but it will provide
you with an allocation you can use. If you can't get the
assessment from when you bought the property I'd use the one
as close as possible. You can also get a real estate
appraiser to calculate this for you - sort of a retroactive
appraisal. But this is usually pricey.

Lastly - I'm not surprised if your $100K property was valued
at $80K for insurance purposes. Since land can't be worn
out, used up, burned, or made worthless by ordinary means
(ignoring the likely commercial problems like EPA
contamination) most lenders won't insure land for
residential use.

SIDE NOTE - when my wife and I moved to Delaware last year
we had a bit of a run around with the lender. We got an 80%
LTV loan for the house and land, but the insurance company
would only insure the value of the house. The lender
initially insisted that we get insurance to cover the entire
loan amount - Of course, I agreed to pay for this insurance
if the lender would only point me to a insurer who would
insure dirt! <G> . Needless to say, in the end we go the
loan and only insured the house.

Gene E. Utterback, EA

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Harlan Lunsford wrote:
- quote -

We are assuming that OP bought land along with the building.

Sometimes we might run across a situation where one buys the
building subject to renting the land. Like my father did,
buying a warehouse but renting land from Central of Georgia
Railway for long term basis. Or like I did in Baltimore
where they had (still have?) "nonredeemable ground rents".

ChEAr$,
Harlan Lunsford

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"Dorothy" <dordan[at]695online.com> wrote:

- quote -

You use the lesser of your cost ($100K) or Fair Market Value
(FMV) as of the date you put the house into service as a
rental property. You do not get to depreciate the land. You
might want to get an appraisal done which would give an
estimate of the value of the land and the house. If the
house is appraised for more than the $80K, you should
consider increasing your insurance coverage.

Summary:

If the house is appraised at $90K and the land at $30K, you
could reasonably calculate the depreciable basis as such:

Depreciable value = (90/120 * 75) + 25
= 56.25 + 25
= 81.25

I hope you can follow my math. I'm notoriously poor at
showing my work.

Gary

--
<-------------------------------Figure X out which X letters to remove to X e-mail me.

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Herb Smith <smithff33[at]aol.com> wrote:
- quote -

Does that mean he has to know the allocation of cost to
house and land on the original purchase date?

Suppose back then it was land $50K, house $25K. He's since
added $25K to house; would that mean the depreciation is on
$50K?

How can anyone figure out the allocation way back then?

Seth

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Dorothy wrote:

- quote -

Not quite that easy an answer. From you facts so far,
it's the 75k MINUS the value of the land at the time you
bought it, plus the 25k. Might be around 80k,; might be a
tad different.

ChEAr$,
Harlan Lunsford, EA n LA

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dordan[at]695online.com (Dorothy) wrote:

- quote -

The lower of cost or FMV on the date converted to a rental.

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"Dorothy"
<dordan[at]695online.com> wrote:

- quote -

The $100k you spent.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Dorothy <dordan[at]695online.com> wrote:

- quote -

Well, since you placed the house into rental service in 2002, you
start with your 2002 tax retun.

You need to separate the land from the building, since the land
does not depreciate.

Then the value you use is the lower of the cost of the building or
the fair market value of the building on date of placing the
rental into service. Add to this the improvements you made,
and that's the value used for depreciation.

Unless you placed this into service during the 4th quarter of
2002, you use MACRS MQ 27.5 (See Pub 946 for gobbleygook)

--

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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- quote -

The lessor of basis or fair market value on the date it
became a rental (which may or may not be the insurance
evaluation).

Helen, EA in PA
50 miles, 3 days, 1 cause - Multiple Sclerosis Challenge Walk for the Cure
October 1 to October 3, 2004
Donate on-line at www.msandyou.org

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"Dorothy" <dordan[at]695online.com> wrote:

- quote -

This should have been decided on and used in your 2002 tax
return (the year it was first rented). Did you not file
that yet?

Wayne Brasch, CPA, M. S. Taxation

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dordan[at]695online.com (Dorothy) wrote in

- quote -

Seems like you bought a house AND the land it is on. Since
the land can't depreciate (I think), you would only include
the value of the "improvements", i.e. the house.

All biochemical advice will be charged for. Other advice is
free.

--
Best regards
Han
email address is invalid

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About 20 years ago, I bought a fixer upper for $75k, made
$25k worth of improvements. I moved out and rented it to a
disabled person in 2002. My ins. co. wrote a rental policy
which includes valuing the house at $80k. The Pub 946
snowed me. What value/term should I use to depreciate the
house [the house was built in 1971]?

Any advise is appreciated.

Dorothy

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