USA Local rental property assessment


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If after a few years of actually acquiring a rental property, the local government suddenly changes the allocation of land and building valuation for property taxes: what do you do for depreciation?
Example: (note: no improvements at all were made during this time)
7 years ago: land value 295,000 building value 5,000
now: land value 110,000 building value 250,000

What are the options:
Do you stay the course in the future and continue to not depreciate anything?
Do you start depreciating based on new property tax appraisal/assessment?
Do you have the option to choose, or must you do one or the other? Will IRS assume you should be depreciating and get hit with some recapture in the future, even if you didn't depreciate anything?
 
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If you purchased rental property with a building, how did you or anybody come up with the building value at $5,000?
 
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Talk to you accountant and look at filing amended returns as far back as you can. Your purchase agreement may hem you in if it distinctly states the value of each asset you purchased, if not, you're on better ground. IMHO. By the way, as Mike kindly pointed out, someone dropped the ball on the building's estimated value!
 

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