Homeowners usually know the approximate value of their home, because they pay a mortgage every month, but the worth of your home is actually the worth of the physical structure and the land underneath combined. Sometimes, however, it is important for a homeowner to know those two separate values.
This can be especially important if you have a home office and want to depreciate that portion of your home for tax purposes. You must know how much the home is worth and how much the land is worth because while you can depreciate the physical structure, you can't depreciate the land it sits on.
Using An Appraiser
The easiest way to determine the value of your land compared to the value of your home is to hire a professional appraiser. An appraiser is a professional who has background knowledge and experience to determine the value of your property based on where it is located and the current market. An appraiser can give you an independent, official determination of the approximate worth of your property and home. You will, however, have to pay out of pocket, and a reputable appraiser can be costly.
Comparable Land Sales
Another way to determine the value of your land is to look at empty land that is very similar to your land and see how much it sells for per acre. When you look at several different comparable land scales, you can create an average cost per acre in your area for land that is similar to yours. This will give you an approximate value of your land if it were to be sold as an empty lot today. You can then subtract that amount from the value of your home and land together to determine how much your home structure is worth.
You can also use some basic calculations to determine an approximate worth of your home compared to the land it sits on. The most common calculation involves using the total cost you paid for your home, including transfer taxes, recording fees, utility connection fees and title insurance. Then, the assessed value of the house is divided by the total assessed value of the house and land. This results in the percentage of your total cost that your home makes up. The remaining percentage is the percent of the total that your land makes up. Because this process can be complex and inexact, it is important to make sure that your calculations are correct by comparing them to comparable land sales and any appraisals available.
Items you will need
- Property tax bill
- If you have a copy of an appraisal, and it breaks out the house and land values, you can also use it to establish the allocation of value between the house and land. The Internal Revenue Service's rule of thumb is that your allocation should be based on fair market values, however you calculate them. You can also use an allocation that appears in your purchase agreement, if it has one.
- Ablestock.com/AbleStock.com/Getty Images
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