Hello,
I hope this is the correct place to post.
My wife and I started renting out our house last year (2006). We purchased the house in 2002. I have the county assessments for 2004-2007. For 2004 - 2006, the breakdown was roughly 40% Buildings and 60% land. Then with the 2007 assessment, the county changed their assessments to be 24 % Buildings and 76% land. My questions are:
Which ratio do I use to get the building amount, for determining my allowable depreciation on my tax return? Do I need to get the 2002 numbers, or do I use the 40/60 split from 2006? If I use the 2006, do i need to change it come 2007 to reflect the new assessments? If I use the 40%, my expenses will be larger and will thus offset my gain for the years I am renting it, but will additionally affect my gain (via the basis) when it comes time to sell? What is the correct course of action.
I would really appreciate some assistance.
Thanks!