Depreciation of land vs. building

[Mariah Jeffery]

I bought several properties this year and I'm trying to figure out how to get the highest depreciation deduction possible. I do my taxes myself and plan to continue to do so.

The value of the land, according to the tax assessor, is generally a very high percent of the property's value. Here is an example of a property that I've bought:

Duplex:
Purchase price - $59.5K
Tax assessment - $63K ($26K for land, $37K for building)
Appraisal - $67K total value

The best I can come up with is to take the $26K for land and divide this by the $67K appraised value, to get 38.8% of the value allocated to land. This will allow me to depreciate 61.2% of the $59.5K purchase price, or $36.4K. I'll allocate a few thousand to appliances, which can be depreciated more quickly, and the rest to the building itself. Is there any way I can justify depreciating any more than 61.2% of the purchase price?

I have another property that I purchased for $72.6K, and did not have an appraisal. The tax assessment is $77K with $26K going towards land. This property has two nice houses on it and I'm sure the market value is upwards of $100K. For this one, can I use some comps to determine the total value and still use the $26K as the value of the land?

I'd really appreciate some creative ideas on how to increase my depreciation deductions. Thanks!

~MJ

[Will Barnard]

Do you do your own surgeries as well? I am of the opinion that some tasks are better left to the professionals with proper experience and certifications and a CPA is no different.
The fact that you are asking this question should be a red flag that you need a CPA.

If you are simply trying to avoid the costs of a CPA, it is my opinion that the costs of such a professional are paid for in the deductions you get and the mistakes you avoid rather than going at it alone.

As for cost segregation, that is usually left for commercial properties and not single family or duplex units. Also, keep in mind that the more you depreciate, the more you recapture in the end.

I strongly encourage you to seek professional guidance on this matter from an experienced RE CPA.