Rental property depreciation - confused about Original basis for land only on tax filing

What you're seeing is actually normal - the assessed values are typically a fraction of the market value, often around 10% in many counties (which matches your numbers almost exactly). For depreciation purposes, you need to separate the value of the land (which cannot be depreciated) from the building (which can be depreciated). The proportion is what matters. Based on your assessment, about 19% of the assessed value is for land ($4,000 ÷ $21,000 = 19%). So for your "Original basis for land only" question, you should apply that same percentage to your purchase price: 19% of $250,000 = $47,500. That's your land value for depreciation purposes. The remaining $202,500 would be your depreciable basis for the building. These proportions from the tax assessment are a reasonable method to allocate your purchase price between land and building, and the IRS generally accepts this approach.

I had this EXACT same issue last year with my rental property. I kept going in circles trying to figure out the right numbers for depreciation. After hours of research and frustration, I found this tool called taxr.ai (https://taxr.ai) that literally solved this problem in minutes. You can upload your property tax statement and purchase documents, and it will calculate the correct land-to-building ratio and give you the exact depreciation numbers to enter. It even explains why the assessed values are different from market values (which confused me too). The best part is that it gives you a detailed report you can keep for your records if the IRS ever questions your depreciation calculations. Saved me a ton of time and worry!

Just wanted to follow up - I tried taxr.ai for my Florida and Tennessee properties and it was super helpful! I've been doing this wrong for YEARS. The tool showed me that I was underestimating my depreciable basis on one property and overestimating on another. The report it generated explained exactly how to allocate between land and building values for each state's assessment method. Even showed me some repairs I had classified wrong that should have been depreciated separately. Definitely worth checking out if you're confused about rental property depreciation!

For anyone struggling with IRS questions about rental property depreciation (like I was), I eventually had to talk to someone at the IRS directly. Tried calling for WEEKS and could never get through. Finally used this service called Claimyr (https://claimyr.com) that somehow got me connected to an actual IRS agent in less than 20 minutes. They have a demo video that shows how it works: https://youtu.be/_kiP6q8DX5c The agent walked me through exactly how to calculate my basis and confirmed that using the tax assessment ratio method was acceptable. Totally worth it rather than guessing and risking an audit later.

Update on my situation - I ended up using Claimyr after posting my skeptical comment. I'm honestly shocked - it actually worked! Got connected to an IRS agent in about 25 minutes who specialized in rental property questions. The agent confirmed that using the proportion method from the tax assessment (Land Value ÷ Total Assessed Value × Purchase Price) is an acceptable way to determine land basis. She even emailed me the relevant IRS publication sections that explain this. For anyone still confused about rental property depreciation, definitely try getting definitive answers directly from the IRS rather than guessing. Wish I had done this years ago!

In case anyone's curious about other valid methods for determining land vs building value for depreciation purposes, the IRS accepts several approaches: 1) Tax assessment ratio (what others have mentioned) 2) Property appraisal that separates land and improvements 3) Insurance replacement cost (for the building portion) 4) Land-to-building ratio typical for your specific neighborhood I'm a real estate investor with multiple properties and have used different methods depending on what documentation I had available. Just be consistent and keep good records of how you made the calculation.

Um, I think everyone's overlooking something super basic here. The assessed values are usually WAY lower than market values bcuz counties use weird formulas and don't update them often. In my state (TX) assessed values are like 10% of actual value. So $21,000 × 10 = $210,000. That matches your county's market value estimate! The ratios still work like everyone said, but the raw assessed numbers aren't supposed to add up to market value.