To determine the value, you can use the fair market value of each at the time you bought the property, or you can base the number on the assessed real estate tax values. Say you bought a house for $110,000. ![]() As you can only depreciate the cost of the building and not the land, you must determine the value of each to depreciate the correct amount. Separate the cost of land and buildings.These include fire insurance premiums, rent for tenancy of the property before closing, and charges connected to getting or refinancing a loan, including points, mortgage insurance premiums, credit report costs, and appraisal fees. Some settlement fees and closing costs, including legal fees, recording fees, surveys, transfer taxes, title insurance, and any amount the seller owes that you agree to pay (such as back taxes), are included in the basis. Some settlement fees and closing costs can’t be included in your basis. The basis of the property is its cost or the amount you paid (in cash, with a mortgage, or in some other manner) to acquire the property.
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