Land vs Building Value Calculator

Splitting a property's purchase price between its land and its building is one of the more consequential decisions a real estate investor makes, because only the building portion can be depreciated. Getting the allocation right establishes a defensible cost basis for the structure and lets you claim accurate write-offs over its useful life. The way you document this split carries real weight for the tax benefits you can capture.

IRS Publication 527 splits the cost by the fair market values of the land and the building when you buy; if you aren't certain of those, it lets you use the assessed values published by your local tax authority, which typically list land and improvements as separate line items. Divide the assessed land value by the total assessed value to get a land percentage, then apply that percentage to what you actually paid; whatever remains is attributed to the building. When assessed figures are missing or look unreliable, a professional appraisal that explicitly breaks out land and improvement values is the better basis to work from. Once you have the building figure, enter it with the total price: the calculator subtracts it to give the land value and both percentages, and shows the building value as your depreciation basis.

Defaulting to a blanket 20% land / 80% building split is where investors get into trouble. Pulled from thin air, that ratio can leave you under-depreciating or draw IRS scrutiny if the numbers don't match reality. Because land itself never depreciates, every dollar you push toward it is a dollar of write-off you forfeit, so lean on assessment data or an appraisal rather than a rule of thumb. Hold onto whatever methodology you used in case the allocation is ever questioned.