Land Basis Allocation Calculator

Land basis is not depreciable — allocate carefully.

Total purchase price

Land allocation %

Bonus depreciation %

Recovery period years

Annual straight-line deduction

$327,273

Building basis

$9,000,000

Year 1 deduction (with bonus)

$3,927,273

How the math works

Building = total × (1 − land %). Annual SL = building / recovery. Year 1 with bonus = annual + building × bonus %.

$12M × 75% = $9M building. / 27.5 = $327k/yr SL. + 40% bonus $3.6M = $3.93M year 1 deduction.

How to Use

Enter total purchase price.
Enter land allocation %.
Enter bonus depreciation %.
Enter years to recover.
Read depreciable basis and annual deduction.

Frequently Asked Questions

Why matters?

Land is not depreciable. Building is. Higher building allocation = more depreciation = lower taxable income = higher after-tax yield. IRS accepts reasonable allocations supported by appraisal, tax records, or insurance values.

Typical splits?

Urban Class A office: land 20-40%. Urban multifamily: 15-35%. Suburban single-story retail: 25-50% (land-heavy). Industrial: 15-30% (building-heavy). Submit cost segregation study to maximize deductions and minimize land allocation.

Supporting documentation?

Appraisal by licensed appraiser. Tax assessor allocation. Insurance replacement cost. Cost segregation study. All carry weight with IRS. Best practice: third-party appraisal at closing, cost segregation study in year 1, both filed with tax return.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.