Calculating cost basis for rental

[Swati Patel]

Hi all, appreciate your time in reading my post and taking the time to respond. My question is as follows.

I bought my rental property in 2016 for $300K and the property tax letter accessed land value as $120K and structural value is $180K. Fast forward to 2020, the value of the rental has appreciated to $330K and property tax letter has now assessed land value as $130k and structural value as $200K. 

Which number of structural value should I use for cost basis? the value from 2016 when I purchased the property or the recent value?

If I use the recent value, then every year the cost basis will change because the accessed value is changing every year. 

[Natalie Kolodij]

Originally posted by @Swati Patel:

Hi all, appreciate your time in reading my post and taking the time to respond. My question is as follows.

I bought my rental property in 2016 for $300K and the property tax letter accessed land value as $120K and structural value is $180K. Fast forward to 2020, the value of the rental has appreciated to $330K and property tax letter has now assessed land value as $130k and structural value as $200K. 

Which number of structural value should I use for cost basis? the value from 2016 when I purchased the property or the recent value?

If I use the recent value, then every year the cost basis will change because the accessed value is changing every year. 

Has it been a rental since 2016? 

You never change your depreciable basis. Regardless of what market value does. 

You also don't use the literally values from the tax assessor- You use their %.

They put $120k to land $180 to building= 40% land 60% building. 

This is a rare instance where what you paid = what the tax assessor also valued it at. 

So long story short ....

You apply 40% land value 60% building value to what you paid.