Depreciation Basis for BRRRR property

[Andrew Namkoong]

Hi everyone,

I am trying to figure out what the depreciation basis will be for the property that I will be closing in two weeks.

I am buying a property with full cash, doing some minor exterior rehabs (place is already rented out to a tenant) and then going to do a cash out refinance within 1-2 month. I found a bank that would do a cash out refi with no seasoning + on ARV.

My question is: 

Purchase price: $31,500

Expected Rehab: $3,000

Expected ARV appraised by the bank: $42,000

Land value on tax assessor's website: $11,500

Is my depreciation basis 31,500 - 11,500 = 20,000? or is it 42,000 - 11,500 = 30,500?

Thanks in advance!