calculating land value for depreciation

[Carlos Santiago]

hi -- i've got a rental property I purchased this year -- I know for depreciation I have to pull out the land value -- is there any set way of doing that? can I just estimate about 20% of the purchase price?

[Joe Wilson]

Wow, son. Don't just use 20%. You can do it a couple of ways.

Find out what the comps are for raw land by acre in the area are and multiply it by the amount of acreage that came with the property. Take that figure out of the purchase price for depreciation.

Another way is to look on the real estate assessment for the property to figure out what the land portion is on the property tax and then take that amount out.

Looking at the property tax assessment may yield a lower amount to pull out of the depreciable figure and that is to your benefit.

Joe