Depreciation on Foreclosure

[Erik Garland]

Hey guys/gals. Straight to the point

I purchased a foreclusure for approx 24k, it didn't need much work, maybe 2k.  The Tax value with county is 37k for building and 5k for land.  When getting cost basis for straightline depreciation, what do I do? 

-- 37k (county's building value) is 88% of 42k (county's total value).... 

Should I take 88% of my purchase price of 24k= 21k and use that for my building cost?

Or can I use the 37k as my cost basis.

Thanks a ton !!! I've not depreciated anything for about 3 years now :((

[John Thedford]

You cannot depreciate the land..only the structure. Take your cost basis (what you paid plus what the improvements costs are) and separate the land value. That is the basis for your depreciation. If it is commercial the depreciation time is 39 years. If it is residential the timeline is 27.5 years.