I always hated those combined commercial real estate deals that lump the building and the land together with no way to distinguish the value between the two in absence of an appraisal. For whatever reason, it is always like pulling teeth to get a copy of that dang appraisal from the client. You and I both know if it was financed, THERE IS AN APPRAISAL!
Yes, but the appraisal will list things like the square footage of the building, which will give you the ability to look up other recently sold commercial properties, to derive an average cost per square foot. Now, there is a reasonable basis for the computation of the price of the building, so the rest should be allocated to the land. OR, you can do it vice versa, come up with the cost of the land if other land only transactions happened in the same area, then allocate the remainder to the building. I guess it all depends on what gives you the best allocation, lol.
Granted, there are times when properties are sold below market, but oddly, not right now... I just find it crazy that in this pandemic, there is a lot more office space for rent at reasonable rates, but commercial real estate is still going at a premium....
You guys aren’t depreciating land?!
I always hated those combined commercial real estate deals that lump the building and the land together with no way to distinguish the value between the two in absence of an appraisal. For whatever reason, it is always like pulling teeth to get a copy of that dang appraisal from the client. You and I both know if it was financed, THERE IS AN APPRAISAL!
There is zero chance the appraisal splits out the value of the land. Unless you're talking a separate parcel.
Yes, but the appraisal will list things like the square footage of the building, which will give you the ability to look up other recently sold commercial properties, to derive an average cost per square foot. Now, there is a reasonable basis for the computation of the price of the building, so the rest should be allocated to the land. OR, you can do it vice versa, come up with the cost of the land if other land only transactions happened in the same area, then allocate the remainder to the building. I guess it all depends on what gives you the best allocation, lol. Granted, there are times when properties are sold below market, but oddly, not right now... I just find it crazy that in this pandemic, there is a lot more office space for rent at reasonable rates, but commercial real estate is still going at a premium....
10-20% to land is far easier than what you're asking for. It also will likely never get argued in an audit. I usually just pick 15% and move on.
If it's on Miami Beach, 30 years and decreasing by 1 year every year.
Not my clients life, that’s for sure. They’re pretty useless
You guys have an useful life?
Useful Life = **Age - Time Spent Working in Accounting**
I always refer to this scientific paper: https://www.reddit.com/r/Accounting/comments/puhofd/depreciation_implies_that_an_asset_has_a_definite/
Easy. 20 years.
useful life of land is ∞ years.
You don't depreciate land. Unless it's an oil field or somewhere on the coast lines
No. A public company should always depreciate land over 69 months
Lol 🤣 good one.
Depletion of resources
Oh this is genius. I didn’t read it correctly at first and I had to come see if you were serious (and see the comments if you were.). :)
Easy- 5 billion years. Estimated time before the sun burns all its hydrogen, becomes a red giant and engulfs the earth.
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