Land vs Building Value Calculator
Only the building is depreciable — not the land. Use your county assessor's own land and improvement values to split your cost basis the way the IRS expects, and see your depreciable basis and annual depreciation.
Your cost basis
County assessment (from your property-tax bill)
Use the land and improvement (or "structure") lines exactly as they appear on your assessment — the dollar amounts, not the ratio. Their absolute size doesn't matter; only the ratio between them is used.
Property type
Depreciable (Building) Basis
$251,300
70% of your $359,000 cost basis
Land (not depreciable)
$107,700
30%
Annual Depreciation
$9,138
over 27.5 years
How the split is calculated
1. Purchase Price$350,000
2. + Closing Costs$9,000
3. = Total Cost Basis$359,000
4. Assessor building ratio ($210,000 ÷ $300,000)70%
5. Land (non-depreciable)$107,700
6. = DEPRECIABLE BASIS$251,300
7. ÷ 27.5 yrs = annual depreciation$9,138
Land is never depreciable. Allocating too much to the building inflates depreciation now but comes back as higher recapture (taxed up to 25%) when you sell. Keep your assessment on file to support the ratio.
Next step: plug this depreciable basis into the Depreciation Calculator to model the full MACRS schedule, or the Cost Basis Calculator to project tax on a future sale.
Track basis, allocation, and depreciation for every property
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Frequently asked questions
Why do I have to split my purchase price between land and building?
Land never wears out, so the IRS does not let you depreciate it — only the building (and its improvements) can be depreciated. Before you can claim a single dollar of depreciation you have to allocate your total cost basis between the non-depreciable land and the depreciable building. Getting this split right is what sets your annual depreciation for the next 27.5 years.
What is the assessor (tax-bill) ratio method?
The most widely accepted method uses the land and improvement values already printed on your county property-tax assessment. You apply the same land-to-building ratio the assessor used to your actual cost basis. For example, if the assessor values the building at 70% of the total assessed value, you treat 70% of your cost basis as depreciable building. It is defensible because it relies on an independent government valuation, not your own guess.
Can I just use 80% building / 20% land?
The "80/20 rule" is a rough shortcut, not a law. It can badly misstate your basis — urban lots are often 40-60% land, while a rural building on cheap land can be 90%+ building. Over-allocating to the building inflates depreciation now but increases recapture when you sell, and an unsupported ratio is exactly what an auditor questions. Use your assessor ratio (or an appraisal) and keep the documentation.
What other allocation methods are allowed?
Besides the assessor ratio, you can use a professional appraisal that separately values land and improvements (the strongest support), a replacement-cost/insurance valuation for the building, or a comparable land-sales analysis. Whichever you use, document it and stay consistent — you generally cannot switch methods just to increase depreciation.
Does this include closing costs?
Yes — capitalizable acquisition costs (title, escrow, legal, recording, transfer taxes, survey) add to your cost basis and are split by the same land/building ratio. Loan costs (points, appraisal for the lender) are handled separately and are not part of the property basis, so leave those out of the figures above.
Is this a substitute for tax advice?
No. This calculator is an estimate to help you plan your allocation and depreciation, not tax advice. Your correct basis depends on your specific facts, documents, and current law. Keep your closing statement and assessment, and confirm the split with a CPA before you file.