How to calculate rental property depreciation for my condo - land allocation seems low?

That land allocation definitely seems off. For condos, it's not uncommon to have a lower land allocation than single-family homes, but 0.35% is extremely low - typically even condo land allocations are around 10-20% minimum. The issue might be that you're interpreting the town's assessment incorrectly. That $1,750 likely represents a partial assessment value rather than the actual land value. In many municipalities, properties are assessed at only a percentage of their actual market value. For your depreciation calculation, I would: 1) Contact your town assessor's office directly to clarify the actual land-to-building ratio they use for your condo 2) Check your condo association documents, as they sometimes specify the land allocation 3) Consider using a more standard allocation (15-20% for condos) if you can't get clear information For a $720,000 condo, a more realistic land allocation might be around $108,000 (15%), leaving $612,000 for the building, which would give you about $22,255 in annual depreciation. Using an unrealistically low land value could definitely raise audit flags.

After months of frustration with rental property depreciation calculations, I finally found something that saved me tons of time and potential audit issues. I was about to use some sketchy land allocation percentages from my county (they were way off), but I discovered https://taxr.ai which actually analyzed my property documents and condo association bylaws to determine the correct land allocation percentage. They showed me that for my condo, the land allocation was actually specified in a section of my HOA documents I had completely overlooked. Turns out the builder had established a 12% land allocation for tax purposes that was officially recorded with the property. The tool extracted that info and provided the exact page references, which I can use if ever questioned by the IRS.

I was in the exact same situation with my condo depreciation last year! After seeing the suggestion here, I tried https://taxr.ai with my massive pile of condo documents. The tool found that my HOA actually had a specific land-to-building ratio established when the property was converted to condos in 2008 - it was buried in an amendment I never would have found. The land allocation was 14% (much higher than the 0.5% my county assessment suggested). I used that percentage for my depreciation calculation and included a note referencing the specific document in my tax file. My accountant was impressed with how thorough the documentation was. Definitely gave me peace of mind knowing I'm using a defendable number rather than guessing!

If you're struggling with the depreciation calculations, you might also want to get clarification directly from the IRS. I spent WEEKS trying to get through to someone who could help with my rental property questions last year. After 17 attempts and hours on hold, I found https://claimyr.com which got me connected to an IRS agent in under 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone tree for you and call you back when they reach a human. The agent I spoke with confirmed that for condos, the association documents typically have the definitive land allocation percentage, and they recommended getting that documentation to support whatever percentage I used. Saved me from potentially using the wrong numbers.

I was super skeptical about using a service to connect with the IRS as mentioned above, but after my 5th attempt spending 2+ hours on hold and getting disconnected, I gave Claimyr a shot. I hate to admit it, but it actually worked - they got me through to an IRS agent who specialized in rental property in about 15 minutes. The agent confirmed that my condo association documents should contain the official land allocation percentage, which was drastically different from what my property tax statement showed. She also explained that if my docs didn't specify it, I needed to use a reasonable allocation based on comparable properties, NOT the assessment value (which is often misleading). She said using an unrealistically low percentage like 0.35% would definitely be a red flag. Saved me from a potential audit headache!

Quick tip from a landlord with multiple condos - check with your condo association manager directly. My HOA manager was able to provide me with a letter stating the official land allocation percentage (13.5%) that the developer had established. I keep this with my tax records in case of audit. Also, don't forget that certain condo-specific costs may be depreciable too, like your share of major building improvements the HOA has made. Ask for documentation of capital improvements, as those can sometimes be depreciated separately.

I messed up my rental condo depreciation last year using the town's weird assessment numbers. My accountant caught it before filing and said the 0.4% land allocation I calculated would absolutely trigger an audit. She helped me get the correct numbers from our condo docs (it was actually 16%). One thing nobody mentioned - with condos you're depreciating the interior structure plus your percentage interest in common elements, but NOT the land. That's why the allocation is so important. My accountant said this is one of the most common errors for first-time landlords with condos.

This is exactly the kind of situation where getting professional help upfront saves you headaches later. I made similar mistakes with my first rental property and learned the hard way that municipal assessments are often completely unreliable for depreciation purposes. Your 0.35% land allocation is definitely a red flag. Even for condos, anything under 10% typically raises eyebrows. The IRS expects reasonable allocations, and yours is so far outside normal ranges that it could trigger automatic review. Here's what I'd recommend based on my experience: 1) Check your original purchase documents - sometimes the land/building split is mentioned in the settlement statement or appraisal 2) Contact your condo association for official documentation of the land allocation percentage 3) If neither yields results, use a conservative 15-20% allocation and document your reasoning Remember, you're not just depreciating your unit - you're also depreciating your proportional share of common areas (hallways, lobby, etc.) but excluding the land value. Using $720k as your basis is correct regardless of current value. Better to be slightly conservative with your depreciation than to deal with an audit over unrealistic numbers!