Land vs structure value

[Greg Fox]

I heard on a podcast during the sale to put in writing the value of the land versus the structure to maximize the depreciable amount. In other words we inflate the structure price and minimize the land value over standard assessment. Has anybody out here done that and can tell me how to do it? Is this a legal and acceptable practice? Thanks

[Andrew S.]

Uncle Sam wants you to determine land vs improvements with one of several methods that are based in reality (not based on what works best for you to maximize deductions).  Usually, your local tax authorities (the ones that determine your property value/taxes) will have already done this and you can use it.  Or you can challenge it to try to get readjusted, if you have reason to think it is off.  Another way that I believe would be acceptable to the IRS is to use "rebuild value" for the improvements from your homeowner's insurance.  Third, if you can come up with credible comps (I.e. recently sold similar land) for the lot, you can use that as the basis for your calculation.  There may be other methods - the bottom line is that you need a credible way to back up whatever numbers you propose (how you arrived at the number and why).

@Steven Hamilton II  will set me straight if I'm off....