JohnH Posted May 9, 2007 Report Share Posted May 9, 2007 This was probably discussed on the old Community , but since there are no archives to search... When setting up depreciation on a residential rental condominium, does anyone make an adjustment for land value? I just always use acquisition cost for the basis, because the condo owner has an "undivided interest in the common elements", which means there is no way to value the land separately from the structure. I'd be interested if there is a difference of opinion on this question. Quote Link to comment Share on other sites More sharing options...
jainen Posted May 9, 2007 Report Share Posted May 9, 2007 >>no way to value the land separately from the structure<< Nonsense! You can bet the mortgage company knows what are improvements and what are not. So do all the various insurance companies in the complex, the county assessor, the real estate agent, and the attorney for the homeowner's association. And don't forget the professional appraiser that your client has already paid to make exactly that determination! Land is always a significant part of the value of any real estate. That's what the cliche about "Location, Location, Location" means. Since land can not be depreciated, you MUST allocate some of the basis to it. Quote Link to comment Share on other sites More sharing options...
JohnH Posted May 9, 2007 Author Report Share Posted May 9, 2007 So I'm thinking I'd log you in the "NO" column. Quote Link to comment Share on other sites More sharing options...
jainen Posted May 9, 2007 Report Share Posted May 9, 2007 >>So I'm thinking I'd log you in the "NO" column.<< The question in the original post was, "Does anyone make an adjustment for land value?" I assume you didn't misunderstand the question, since you were yourself the one who asked it. Therefore you must have misunderstood my answer. Perhaps I was too reserved in expressing my opinion. Quote Link to comment Share on other sites More sharing options...
JohnH Posted May 9, 2007 Author Report Share Posted May 9, 2007 It could be that you were too reserved in expressing your opinion, but I think it's really because I failed to mention that I'm keeping a running record on who agrees with me or doesn't. So you are in the "NO" column on my agreement record because you answered "YES" to my original question. And after thinking over your reasoning, I agree with you and disagree with myself. Quote Link to comment Share on other sites More sharing options...
jainen Posted May 9, 2007 Report Share Posted May 9, 2007 >>you are in the "NO" column... because you answered "YES"<< A comment worthy of true tax expert! Quote Link to comment Share on other sites More sharing options...
JohnH Posted May 9, 2007 Author Report Share Posted May 9, 2007 Well thank you for noticing. I've had lots of practice. Quote Link to comment Share on other sites More sharing options...
chief Posted May 10, 2007 Report Share Posted May 10, 2007 Well thank you for noticing. I've had lots of practice. Well why dont you guys answer the poster's question. I own a condo. It sold in 2005 for $147,000. The land is owned by the Association. The condos in the association are all in 2 story buildings. If the county assessor has appraised the condo for tax purposes and has not made the distinction in his valuation between the land and the condo how would I or anyone determine separate basis for land and the condo? How would a realtor determine the basis for each? Quote Link to comment Share on other sites More sharing options...
jainen Posted May 10, 2007 Report Share Posted May 10, 2007 >>The land is owned by the Association<< The term "condo" embraces a wide range of ownership arrangements. If your condo includes a membership or share or interest in the common areas or association, it would usually not be appropriate to include that value in the depreciation of the structure. For personal use, you can do as you wish. For a rental, ordinary business care requires that you understand the value of your assets. That is at the heart of the real estate agent's job, as well as the mortgage broker, appraisor, insurance agent, and other professionals. If you continue working with people who can't determine the figures you need, you've only yourself to blame. Quote Link to comment Share on other sites More sharing options...
chief Posted May 11, 2007 Report Share Posted May 11, 2007 >>The land is owned by the Association<< The term "condo" embraces a wide range of ownership arrangements. If your condo includes a membership or share or interest in the common areas or association, it would usually not be appropriate to include that value in the depreciation of the structure. For personal use, you can do as you wish. For a rental, ordinary business care requires that you understand the value of your assets. That is at the heart of the real estate agent's job, as well as the mortgage broker, appraisor, insurance agent, and other professionals. If you continue working with people who can't determine the figures you need, you've only yourself to blame. Thanks, Jainen, for your reply. I checked the county tax assessors web site and because the condo is on land owned by the association the land is not included in the assessment. So if I decided to rent seasonly or by the year the basis of the condo would basically be what I paid for it. except for added improvements. You are right in that their are all kinds of condo arrangements in effect. Many are on land lease arrangements. That's what make our working interesting. Quote Link to comment Share on other sites More sharing options...
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