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The property has a creek running through it and the original owner built right next to that creek. The house would not be permitted today because of set-back requirements. In fact, if there were a significant fire, it is unlikely we would be allowed to rebuild.

Does this make the land worthless such that all the value is in the house for depreciation purposes?


I doubt it. All land has some type of value. And if you can build elsewhere on the site, even if it's not on the original foundation, the land would have residential building lot value. Even if you can't rebuild at all, it would still have some value.

As an example, my road runs along a bluff that has newer setback requirements that would not allow most of the houses on the bluff side of the road to be rebuilt. In fact, one of the houses was condemned because the bluff eroded enough so that the septic tank was exposed. Before the house was condemned, the lot was valued at ~$160k, as a residential lot. After the house was condemned and torn down, the lot is still valued at ~$60k, even though it's not buildable. You could possibly park an RV on it, or use it for pasture.

AJ
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