I own rental property, and I just left my first IRS audit. The IRS auditor arrived at the audit with the county tax assessor’s land and building values assigned to my property tax bill.
That was a surprise to my new CPA, who has been around the block more than once. He said he had not previously seen the IRS arrive at an audit with the tax assessor’s information in hand.
Worse, the property tax bill shows land as 37 percent of the value, meaning that I have only 63 percent that I can depreciate. My original accountant allocated 10 percent to land, so I am facing a sizable adjustment.
I spoke with my old accountant, who said he always used 10 percent and never had any trouble, but he ... Log in to view full article.