I.R.S. Appraisal Method

You purchased a property sometime in the past for $50,000 and today it is worth $100,000. You valued the improvement at 80% of total or $40,000 (which would be reasonable if the property were purchased in the 1970's), the I.R.S. would revalue the improvement at $20,000 according the following method:

Today's Property Value

• Total Value: $100,000 (from local Taxing Authority)
• Building Value: $40,000 (from local Taxing Authority)
• Land Value: $60,000 (from local Taxing Authority)
• Ratio of building to total: 40% i.e. (40,000 / 100,000)

I.R.S. Extrapolated Value at Purchase

• Original Purchase Price: $50,000
• I.R.S. Improvement Value: $20,000 (i.e. ratio from above 40% * $50,000)
• I.R.S. Land Value: $30,000 (i.e. [100% - 40%] * $50,000)