 Cost of Dirt (by David [NC]) Apr 17, 2018 8:16 AM
 Cost of Dirt (by elliot [RI]) Apr 17, 2018 8:24 AM
Cost of Dirt (by Barb [MO]) Apr 17, 2018 8:52 AM
Cost of Dirt (by S i d [MO]) Apr 17, 2018 9:49 AM
Cost of Dirt (by NE [PA]) Apr 17, 2018 10:04 AM
Cost of Dirt (by Kim [TX]) Apr 17, 2018 10:34 AM
Cost of Dirt (by cjo'h [CT]) Apr 17, 2018 11:05 AM
Cost of Dirt (by David [NC]) Apr 17, 2018 11:07 AM
Cost of Dirt (by RB [MI]) Apr 17, 2018 1:21 PM
Cost of Dirt (by NC INVESTOR [NC]) Apr 17, 2018 2:24 PM
Cost of Dirt (by NE [PA]) Apr 17, 2018 2:58 PM
Cost of Dirt (by Pmh [TX]) Apr 17, 2018 3:25 PM
Cost of Dirt (by Johnny B. [MA]) Apr 17, 2018 4:45 PM
Cost of Dirt (by Pmh [TX]) Apr 17, 2018 4:54 PM
Cost of Dirt (by NE [PA]) Apr 17, 2018 4:57 PM
Cost of Dirt (by Pmh [TX]) Apr 17, 2018 5:09 PM
Cost of Dirt (by NE [PA]) Apr 17, 2018 5:16 PM
Cost of Dirt (by fred [CA]) Apr 17, 2018 5:37 PM
Cost of Dirt (by Ray-N-Pa [PA]) Apr 17, 2018 6:54 PM
Cost of Dirt (by plenty [MO]) Apr 18, 2018 5:32 AM
Cost of Dirt (by plenty [MO]) Apr 18, 2018 5:32 AM
Cost of Dirt (by plenty [MO]) Apr 18, 2018 5:32 AM
Cost of Dirt (by NC INVESTOR [NC]) Apr 18, 2018 7:43 AM
Cost of Dirt (by #22 [MO]) Apr 18, 2018 3:45 PM
Cost of Dirt (by Pmh [TX]) Apr 19, 2018 1:20 PM
Cost of Dirt (by David [NC]) Posted on: Apr 17, 2018 8:16 AM
Message:
I was listening to Mike Butler and he made a comment that I thought was interesting. He said he tells the accountant the price of the dirt. When you depreciate the property you can't depreciate the dirt. So my question is, how do you determine the price of the dirt? Previously I just used the amount the tax department used, but it got me thinking maybe I need to do something different . . .
--71.50.xxx.xx |
Cost of Dirt (by elliot [RI]) Posted on: Apr 17, 2018 8:24 AM
Message:
Unless you dispute the land base with the assessor's office..
I wonder where you can find that info for when you purchased the property. (their website only keeps current info) I hope the office keeps all records --144.160.xxx.xx |
Cost of Dirt (by Barb [MO]) Posted on: Apr 17, 2018 8:52 AM
Message:
Look for lots for sale in the area. Determine the cost per acre, and your's is likely a similar cost. --131.151.xx.xx |
Cost of Dirt (by S i d [MO]) Posted on: Apr 17, 2018 9:49 AM
Message:
Probably the correct way to do it is have an appraisal done of vacant land in the area, but it is likely also acceptable to get comparable sales pulled from the MLS or from any other similar land you have purchased recently in the same area.
Ultimately, it comes down to what an IRS auditor thinks is reasonable, and that's only a concern if you ever get audited. Most auditors are local, so you could also ask area CPAs who work with rental owners what the typically allocation split is in your area. My CPA says the "going rate" is 80/20 (structure to land). Since I own mostly Class C in low $ value hoods, I could possibly argue it's more like 90/10 and doubtful it would ever be an issue, but on my sub-$30,000 houses the difference in getting 10% more dollars of depreciation over 27.5 years is pretty piddly.
Whatever number you settle on, the auditor would have to cite cause for why it is unreasonable. Might be more problematic in areas where the value of the dirt is truly much higher....such as if you owned rentals text to Disney World. --173.17.xx.xx |
Cost of Dirt (by NE [PA]) Posted on: Apr 17, 2018 10:04 AM
Message:
Why did he say this and what context did he use it in? --50.107.xxx.xxx |
Cost of Dirt (by Kim [TX]) Posted on: Apr 17, 2018 10:34 AM
Message:
I am going through this now. One acceptable way to do it is to use the tax appraisal of your property, and apply whatever ratio the assessor uses between land and improvements to your current market value. --23.30.xx.xxx |
Cost of Dirt (by cjo'h [CT]) Posted on: Apr 17, 2018 11:05 AM
Message:
David,why would you even want to know.Order 10 Or 12 yards of loam for your lawn.or check with the local cemetery.They'll tell you in a Holy minute.When they tell you,May change your perspective...............................................charlie............................................... --174.199.x.xx |
Cost of Dirt (by David [NC]) Posted on: Apr 17, 2018 11:07 AM
Message:
Well Mike was saying that he tells his accountant what the land value is and it looked to me like his numbers were low, which got me thinking. I have just pulled the property tax assessment for the house and it will say like $20K for the land and $80K for the house and that is what I told the accountant but around here a 1.0 acre lot might go for $20K and a lot of my houses are on 0.3 or 0.5 acre lots which means the land value could justifiably be 8K to 10K.
I don't know if I am thinking outside the box or just letting my gerbils spin the wheel for exercise. I am always trying to minimize taxes. --71.50.xxx.xx |
Cost of Dirt (by RB [MI]) Posted on: Apr 17, 2018 1:21 PM
Message:
Cost of Dirt,
to Fill the Hole after a House Fire.
--47.35.xx.xx |
Cost of Dirt (by NC INVESTOR [NC]) Posted on: Apr 17, 2018 2:24 PM
Message:
Federal taxes want the tax assessor's number. It should be broken out on your annual tax bill. You'll notice the value of the land never changes. --71.75.xx.xx |
Cost of Dirt (by NE [PA]) Posted on: Apr 17, 2018 2:58 PM
Message:
I'm a little confused about this. Hopefully someone can dumb it down to my level for me. --50.107.xxx.xxx |
Cost of Dirt (by Pmh [TX]) Posted on: Apr 17, 2018 3:25 PM
Message:
NC incorrect. tax appraisal of my house dirt went from 80k to 300k from one year to the next. tax rates capped in TX but not the appraisal....the improvement part (house) went up only 20k....is all the CA people moving to TX to avoid the taxes they voted for...we need a wall on the west. not the south. --104.218.xxx.xx |
Cost of Dirt (by Johnny B. [MA]) Posted on: Apr 17, 2018 4:45 PM
Message:
NE [PA] - The conversation is about depreciation of a property for tax purposes. If a property is worth $100k, a percentage of the total value is the structure and a percentage of the value is the land. Since you cannot depreciate the land, for tax purposes it’s in your best interest to maximumize the percentage of the $100k total value that is associated with the structure, and minimize the percentage of the $100k that is associated with the land. This will give you the largest possible depreciation expense on your taxes. It’s an interesting conversation... I’m curious too see if anyone else has any tricks. --24.147.xx.xxx |
Cost of Dirt (by Pmh [TX]) Posted on: Apr 17, 2018 4:54 PM
Message:
that of course is correct Johnny. always better to max cash flow now by reduced taxes bc of depreciation but bear in mind later that will be recaptured. when I buy I set the divisions based on prior % allaocations of appraised values per guidance of my enrolled cpa. I like to be conservative and not deal with contretemps later. --166.137.xxx.xx |
Cost of Dirt (by NE [PA]) Posted on: Apr 17, 2018 4:57 PM
Message:
So am I correct in thinking that he is telling
his accountant the price of the dirt in the first year of ownership to write off that total amount and then depreciate the building? --50.107.xxx.xxx |
Cost of Dirt (by Pmh [TX]) Posted on: Apr 17, 2018 5:09 PM
Message:
correct. you were incorrect on statement that value of dirt never changes... --166.137.xxx.xx |
Cost of Dirt (by NE [PA]) Posted on: Apr 17, 2018 5:16 PM
Message:
I didn't say the value of dirt never changes. It certainly does. --50.107.xxx.xxx |
Cost of Dirt (by fred [CA]) Posted on: Apr 17, 2018 5:37 PM
Message:
If you use the value of the land on your tax bill, the IRS will accept your depreciation schedule. --99.59.x.xxx |
Cost of Dirt (by Ray-N-Pa [PA]) Posted on: Apr 17, 2018 6:54 PM
Message:
No discounts for old dirt vs new dirt.
I just feel as old as dirt some days --24.101.xxx.xxx |
Cost of Dirt (by plenty [MO]) Posted on: Apr 18, 2018 5:32 AM
Message:
so if i have a truck load of dirt brought in to level off yard does that increase the value? Take away a load decrease value? Fun topic! I've hear people say they are older than dirt! --99.203.xx.xx |
Cost of Dirt (by plenty [MO]) Posted on: Apr 18, 2018 5:32 AM
Message:
so if i have a truck load of dirt brought in to level off yard does that increase the value? Take away a load decrease value? Fun topic! I've hear people say they are older than dirt! --99.203.xx.xx |
Cost of Dirt (by plenty [MO]) Posted on: Apr 18, 2018 5:32 AM
Message:
so if i have a truck load of dirt brought in to level off yard does that increase the value? Take away a load decrease value? Fun topic! I've hear people say they are older than dirt! --99.203.xx.xx |
Cost of Dirt (by NC INVESTOR [NC]) Posted on: Apr 18, 2018 7:43 AM
Message:
PMH:
I have never seen the value of the land increase. All assessments are based on the building that sits on that land. Every single property tax bill for the past 15 years has the same land value even though the properties have doubled and in some case tripled in that same time period.
However, my experience is limited to NC and PA.
Obviously, based on your experience different municipalities use a different method most likely based on the scarcity of land for new development.
When reporting the land value when selling that is set by the tax assessor's office and that is value that the Fed's use. --71.75.xx.xx |
Cost of Dirt (by #22 [MO]) Posted on: Apr 18, 2018 3:45 PM
Message:
NE,
Find me in STL or OKC this weekend. There's a lot more to land than most people think.
By using cost segregation, a portion of the (gross) land amount may be depreciated. This may blow some people's mind on the board.
As far as price for the land, a % split can be foolish. It's in the owner's interest to justify the lowest amount for the land as they can reasonably justify.
Lots of vanilla accountants will just do an 80/20 split or something foolish like that, which is usually a massive disservice to the investor.
--173.24.xxx.xxx |
Cost of Dirt (by Pmh [TX]) Posted on: Apr 19, 2018 1:20 PM
Message:
NC. In Tx there are two parts to the tax appraisal. The land value & the improvement value. based on my last notice the land is now worth 5x what it was 3 years ago and my house at 1.2x.....rates are capped in TX but not values. we can dispute values, which I do every year however appraisers in bed with the politicians who spend the tax $.... --166.137.xxx.xx |
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