Posted by Dave T on April 15, 2007 at 12:14:41:
I agree with the formula, but I would apply the ratio to the $15K purchase price only to determine the portion of the purchase price that should be allocated to the land value.
The $10K in rehab cost applied to the structure is fully depreciable. So I would get the depreciation basis as follows:
Depreciation Basis = Purchase price - cost of land + rehab cost.