Renting Condo - How to Break Out Depreciable Cost

[beck]

Hello All!

I usually use a property tax bill to calculate depreciable basis percentage based on separate figures for land and dwelling. However, property tax bill does not break out the cost of land. Any sage bits of info to allocate a proper percentage for non-depreciable land? Thanks so much for your help.

Beck

[Kram BergGold]

What I Do

I use 5-10% of cost for land. You are going to have to find your own acceptable formula.

[taxea]

I would call the assessors office. 5-10% seems small to me. In Hawaii, unlike most states, the land is usually higher than the residence building.
If this is a fee simple property then the condo association may be able to answer the question.

[JohnH]

I'd suggest using 5-10%. (Unless you're in Hawaii).

[RitaB]

Condo Assn

Hello All!

I usually use a property tax bill to calculate depreciable basis percentage based on separate figures for land and dwelling. However, property tax bill does not break out the cost of land. Any sage bits of info to allocate a proper percentage for non-depreciable land? Thanks so much for your help.

Beck

Could it be that the Condo Assn owns the land, not the condo owner?

[taxmom34]

i always thought that condo's do not own land, though I never had a client who owned a condo. maybe that's why assessor does not break out land value, because condo most likely pays rent for land. isn't that the same as trailer park where you own the trailer but pay rent for putting the trailer on owner's land.

[RitaB]

I've seen it both ways

i always thought that condo's do not own land, though I never had a client who owned a condo. maybe that's why assessor does not break out land value, because condo most likely pays rent for land. isn't that the same as trailer park where you own the trailer but pay rent for putting the trailer on owner's land.

Yes, I think this is what beck's client may have here.

I manage a Condo Association where the condo owners DO own the land. The TN Property Data shows each of the 46 owners having $6,000 in land. I figure if it's NOT on the assessor's data, it's probably because the association owns the land.

[beck]

Thanks!

I appreciate all your input. I was getting worried when this thread took awhile to get some responses.

Beck

[RitaB]

Hold up

I appreciate all your input. I was getting worried when this thread took awhile to get some responses.

Beck

Hey, don't run off. Does your client own any land?

[Roland Slugg]

Condominium owners own their dwelling (usually called "unit") plus the land immediately below it. In multi-story buildings, they don't even own that land, obviously. However, each owner also owns an undivided interest in all the common area, and this includes the land, pool(s), clubhouse, and all other property and amenities that are part of the overall complex and accessible by all owners. (If there is a golf course, that is probably owned separately.)

Accordingly, the land value of a condo is probably about the same portion of a condo's cost as it would be for a typical SFR of similar size, quality and location. In urban regions of California and Nevada, the land value is typically 20% to 30% of the overall cost.

If you know a realtor in the area, you might ask him/her for an estimate of the land/building cost allocation, or ask your clients to ask the realtor they used when buying the property.

[beck]

Rita B

Hello Rita.

No they don't.

Beck

[RitaB]

Well,

Hello Rita.

No they don't.

Beck

Well, I am wrong, and Roland and Publication 527 say they really do own some of the common elements, which include land. See p. 15:

https://www.irs.gov/pub/irs-pdf/p527.pdf