tax assessment on property - land value seems too low

[Ishviyan D.]

Hi. I purchased two properties in 2016 and am having a hard time understanding how to evaluate depreciation. My accountant said that depreciation will be against the value of the land, not the actual home. Is this true? Secondly, when I looked up the county tax assessor websites, I found that my Indianapolis property (which I purchased for $80,000) has a land value of $4,000. And my Kansas City property (also purchased for $80,000) has a land value of $12,000. Can the land values really be this low? And how can depreciating a $4,000 land value over 27.5 years even move the needle? Thank you. 

[Lance Lvovsky]

Land does not get depreciated. You only depreciate the "building/improvement" portion. Subtract the percentage of land as assessed by your county from the amount you bought your house and that is the depreciable basis.

For example: You paid $100,000 for a house. The county assessed the property for $80,000 with 5,000 as land and 75,000 and building. In other words 6.25% of your purchase price is allocated toward land, or in this example, 6,250. So $6,250 is allocated to land and the remaining you can depreciate.