Calculating Depreciation on Residential Rental Property

Posted by dickens on December 13, 2007, 11:19 pm

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I am wondering how adjusted land value (county assesments) throughout
the 27.5 years of straightline depreciation effect the amount to be
deducted as depreciation expense.

Say I buy a house for 100,000. The county has assessed the land at
20,000 at the time of purchase. I then can depreciate 80,000/27.5
every full year. Now what happens down the road when the county
assesses the land at 30,000 (and obviously my structure value would
rise and property taxes would go up, but that's another story). Do i
need to adjust my depreciation calculations or do i continue with the
assessed land value at the time of purchase?

Additionally in my county (St. Louis County) they offer you two
figures for the value of your house an appraised value and an
assessed
value. Which value do i use in this calcluation of depreciation.
The
appraised value seems more accurate having land valued at 20,000 and
the structure valued at 80,000. The assessed value is ridiculously
low (which i think is what they use to determine annual property
taxes) with land at 4000 and structure at 16000. I don't think i
should use the 4000 for land value or should I?

Thanks,

Joe