Depreciation Basis (Purch price vs. Act. Value) - Posted by David

import · April 6, 2003, 8:45pm

Posted by David Krulac on April 06, 2003 at 21:17:47:

purchase price MINUS the land value (non-depreciable)
divided by 27.5 years = one year’s depreciation.

import · April 6, 2003, 8:45pm

Posted by David on April 06, 2003 at 20:45:40:

First off, I will say I own properties in one of the fastest appreciating counties in the country (+25% appreciation for 2 years in a row - here in California).

Last Sept I bought a 4plex for way under market value in the low $300’s. I knew the 4plex at the time was worth over $400k. I got the killer deal due to an auction (which is unusual in California). Even though the property was worth more and all other 4plexes in the area showed higher values, the appraisal at the time showed the purchase price (this seems to be the norm).

I did another appraisal this past January and it came back at $425k confirming what I thought it was really worth.

My question is, can I use a value of between $400k-$425k as my basis for depreciation or am I stuck with $300k even though the place is worth more at time of purchase?

A higher cost basis will allow me to depreciate more which would benefit me greatly in my current situation.

Any advice would be greatly appreciated.

thanks,
David