All Forum Posts by: Michael Deakin

Forgot to mention, I think the fair market value of the improvements should be in the 200-250 K range if they were sold separately.

Thanks for the reply!

I guess I am unsure if a cost seg would be worth it since most of the assets are already on 7-15 yr schedule. That timetable is about what I'd prefer since we have some other startup expenses to offset income for the first couple of years. For context I paid 1.9 MM for the property the appraisal has 119 K on the house and 105 K on the improvements, and the rest to land. Could a cost seg study re-allocate between asset classes or would it just give me quicker depreciation within each class?

For all you more experienced RE investors out there, we recently bought a farm which includes a personal residence for our family, several improvements including large buildings and storage facilities for the farm, and the farmland itself.  The buy/sell agreement didn't allocate the purchase price into the different asset classes, nor was the seller interested in filing an IRS form 8594 to separate out the different assets.  I would like to allocate as much as possible to the farmland improvements in order to claim depreciation and as little as possible to the personal residence and farmland. I have an appraisal done by the bank, but it mainly focused on the farmland and I think it undervalues the farmland improvements by a significant margin. The property tax valuations are way off fair market value as well. 

Can I get the improvements re-appraised by a commercial appraiser to determine their fair market value and just use the leftover basis amount to allocate between the house and farmland according to the % used in the original appraisal?

Are there any other options I can suggest to our CPA to justify to the IRS a higher value for the farmland improvements?

**I understand this forum isn't professional counsel