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Old 09-25-2019, 08:51 AM
 
202 posts, read 121,296 times
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CPA: "Land is never depreciable, although buildings can depreciate"

Does that mean land is more valuable than the building?

Is it true land never depreciate therefore making it a "fixed" asset?
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Old 09-25-2019, 09:03 AM
 
11,401 posts, read 8,097,971 times
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Never say never, it can depreciate if they find something toxic on it or if they find a sink hole.

Land can depreciate if no one wants to buy it or if the area becomes bad. Or if they force you to put city water and sewer on it and get rid of well and septic

I would not say never I would say generally doesn't depreciate.

Land is not more valuable than the building. We have lots in my area for about $10K that's all it's worth, If you build a small $100K home it's now worth $110K or more.

Also depreciable may not be the same as depreciates. Depreciable to me means it can not be deducted as a losing asset.
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Old 09-25-2019, 09:17 AM
Status: "Hard Money Lender " (set 19 hours ago)
 
168 posts, read 37,361 times
Reputation: 373
Quote:
Originally Posted by LifeIsGood01 View Post
Never say never, it can depreciate if they find something toxic on it or if they find a sink hole.

Land can depreciate if no one wants to buy it or if the area becomes bad. Or if they force you to put city water and sewer on it and get rid of well and septic


I would not say never I would say generally doesn't depreciate.

Land is not more valuable than the building. We have lots in my area for about $10K that's all it's worth, If you build a small $100K home it's now worth $110K or more.

Also depreciable may not be the same as depreciates. Depreciable to me means it can not be deducted as a losing asset.
See first bolded section above = that event would be considered an impairment not depreciation. Depreciation, in tax accountancy parlance, means a scheduled decrease in value each accounting period based on wear.

See second bolded section above = Land can be much more valuable than the building ... NYC, SF and Seattle come to mind where a small city lot with a old unstable building can fetch tremendous value for the land and tear down value for the building.

For tax purposes, land never depreciates however its value can be impaired by any number of events. Impairment is not something that can be deducted as depreciation. However, if the land is impaired and the resulting amount realized when sold is less, the seller may have a capital loss.

Last edited by Spokaneinvestor; 09-25-2019 at 10:41 AM..
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Old 09-25-2019, 10:24 AM
 
Location: Raleigh NC
10,044 posts, read 7,545,625 times
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the actual value of land can certainly go up and down.

your CPA is trying to explain to you accounting terms ... probably for an investment property. When depreciating an investment property, there's a schedule for the building, one for personal property, one for "landscaping"/exterior items, and then no schedule for land to be depreciated
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Old 09-25-2019, 10:30 AM
 
Location: Rochester, WA
6,293 posts, read 3,533,791 times
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In accounting terms he's right. Roughly translated, in accounting, depreciation means "the cost of wearing out". Depreciation is a schedule where an item of value has a purchase price and a life span, and you depreciate the purchase price over the life of the item. Land doesn't "wear out". It will not be worn out in 5 or 10 or 50 years and need to be replaced. The buildings on it, might.

It may go up or down in value, but that's not the same thing... in accounting terms.

Last edited by Diana Holbrook; 09-25-2019 at 10:41 AM..
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Old 09-25-2019, 12:36 PM
 
Location: Danbury CT covering all of Fairfield County
2,282 posts, read 6,049,716 times
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In some neighborhoods,the land portion is assessed for tax purposes higher than the dwelling.
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Old 09-25-2019, 02:03 PM
 
Location: Raleigh NC
10,044 posts, read 7,545,625 times
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anywhere popular that the dirt is limited and the houses are old, I bet there's a great % where land value > building value.
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Old 09-25-2019, 04:21 PM
 
Location: Texas
2,041 posts, read 1,423,078 times
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Until you have a flood.
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Old 09-25-2019, 04:45 PM
 
6,049 posts, read 1,546,222 times
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Quote:
Originally Posted by LifeIsGood01 View Post
Never say never, it can depreciate if they find something toxic on it or if they find a sink hole.

Land can depreciate if no one wants to buy it or if the area becomes bad. Or if they force you to put city water and sewer on it and get rid of well and septic

I would not say never I would say generally doesn't depreciate.

Land is not more valuable than the building. We have lots in my area for about $10K that's all it's worth, If you build a small $100K home it's now worth $110K or more.

Also depreciable may not be the same as depreciates. Depreciable to me means it can not be deducted as a losing asset.
You haven't been to California much, right? It's ALL land value there. Except newer, bigger home. But even then a lot of the value is in the land.
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Old 09-25-2019, 05:27 PM
DKM
 
Location: Thousand Oaks, CA
3,118 posts, read 1,113,257 times
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Land cannot depreciate but it can be impaired.
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