condo depreciation basis?

[David760]

Should you allocate any portion of the total cost of a condo to land?

The conservative side of me says yes make an allocation, but the aggressive side of says no the condo owner does not own the land. They pay dues for the maintenance but they cannot do anything to the land.

For example, what would the land value be for one unit on the 3rd floor of a condominium building?

My question concerns residential rental condo and a commercial condo. My thought is the treatment would be the same but I'm not sure.

Thanks.

[taxxcpa]

Condo land

I live in a condo and the tax assessor breaks down the value by land value and improvements value. The total value of the land is probably divided by the total number of condo units or based on the square footage of the units to which a certain percent of the land is ascribed.

About 35% of the assessed value on my unit is for land. This may be a little higher than average since I am in an upscale neighborhood not too far north of downtown Dallas.

[erchess]

Grey Area

In my opinion based on a quick check of Kleinrock Total Tax Office there may very well not be a case that is on point.

Your client cannot independently decide to sell "his" portion of the land without at the same time selling the associated condo. On the other hand many people own free standing structures that sit on small enough patches of land that they cannot legally sell some or all of the land without selling the structure as well. These latter people clearly still apportion some basis to the land.

Do you know whether the condominium developer has retained title to the land and is renting it to the condo association? This is sometimes done as a way of deferring income and therefore tax for the developer. I didn't turn up anything that says whether that is going on is or is not relevant to the taxes of an individual condo owner.

I would close by saying that I know of only three ways that a taxpayer's apportionment of land value can be NOT subject to challenge. The taxpayer is free from challenge if he relies on valuation specified in the sales contract, valuation provided by local government for its tax purposes, or valuation provided by a paid professional appraiser. Failing that, if twenty percent of contract sales price is allocated to the undeveloped land I have never heard of that being challenged unless the land in question was over a couple of acres.

[Gene V]

I have three clients with rental condos; I’ve been using the percent that is showed on
there property tax statement—all three property tax statements shows ZERO for land,
100 percent of tax is base on improvement (building).

[David760]

ERChess

I was also wondering who owned the land.

Historically, I've also used the property tax bills as a guide to allocate land to improvements but I've always had thoughts abouts condo's.

Thank you everyone for your response.

David

[erchess]

Property Tax

I'm in North Carolina and I don't remember seeing a property tax statement that was not from either Durham County where I once lived and worked or Buncombe County where I now live and work. The statements I remember seeing were either on a plot of Real Property or a vehicle and in either case only one value specified for the whole thing. I would love for the government to give an estimate of land value that I could choose either to follow without fear of being second guessed or consider having an appraiser offer another opinion.

[S T]

Nc

I am also now in NC, and in retrieving my property tax statement on my Rental Property, it does show a breakdown between Land Value and Building value. So I can percentage land to bldg for depreciation purposes.

Property Statements in California also have a breakdown of land value and bldg value, as well as several other states that I have looked up online.

Sandy

[Roland Slugg]

Should you allocate any portion of the total cost of a condo to land?

Yes. Each condo owner owns the land directly beneath his "unit" (or an unallocated portion of that land in the case of two or more buildings on a single lot) plus an undivided 1/x portion of the "common area," where "x" is the number of units in the condo association.