Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 03-02-2011, 10:08 PM
Junior Member
 
Join Date: Mar 2011
Posts: 1
how to compute land value

I live in Michigan. I purchased a foreclosure home in 2009 for $25001. I began renting it in 2010. The rental section of Turbo Tax requests the land value. I checked the city's assessor's website and found the land value listed at $34650. It is coming up as an error in TT stating the land value amount is too high. The property was appraised in 2010 at approx $60,000. How do I compute the land value?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 03-04-2011, 03:44 AM
Junior Member
 
Join Date: Mar 2011
Posts: 6
Estimating Land Value

Without an appraisal at the time of purchase, you will need to estimate the value of the land/house when you bought it.

Assuming you purchased the property for use as a rental and immediately started using it for business (preparing it for rental and/or attempting to rent it), and assuming it was assessed in the condition you bought it (you made no major changes to increase/decrease home or land value prior to the assessment), you can use the assessor's home and land values to determine a ratio of the home to land values (e.g. 34,650/xx,xxx = yy% where xx,xxx is the sum total of home and land values) and then multiply that percentage by your original purchase price to determine the land value at time of purchase for entry in TT.

Assuming the sum of land + home value in your property tax statement is 50,000 it would work out as follows:

34,650 / 50,000 = 69.3%

Multiply the calculated percentage by the purchase price to determine land value at the time of the sale.

69.3% * 25,001 = 17,326 (land value)

That leaves
25,001 - 17326 = 7,675 (home value) that must be depreciated

Alternately, you can use your 2010 appraisal in the same fashion (it should break down home/land value for you, which can be used to calculate a percentage).

Note that if you didn't immediately start using the property for business purposes (lived in it, etc.) before renting, you would want to use the value of the property on the day you started using it for rental purposes to establish the land/home values for depreciation/basis purposes in TT. If your 2010 appraisal is close to that date, use the land value specified in the appraisal.

Just remember it's all about the value of the home & land when you started using it for business purposes. Hope that helps.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 03-04-2011, 06:11 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,236
“The property was appraised in 2010 at approx $60,000. How do I compute the land value?”--->Agreed. I guess you need to get some help from an appraiser.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Purchase of Land in Canada on DE C Corp name. alsoum Estimated Taxes 0 09-09-2009 10:54 PM
Utility company rents land pdp215 Rental Real-Estate 1 03-22-2009 02:26 PM
Closing costs for vacant land purchase mantismm Itemized Deductions 1 02-07-2009 10:55 PM
Moved House And Sold Land libby Homeowner Tax 3 02-03-2009 05:18 AM
land swap Joe ca Capital Gains 1 05-05-2008 03:19 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning