Classes of Property 

You will need to classify the “class” of the property involved with your investment. This is a very critical process that, unfortunately, most investors and their accountants only partially complete. Here are the four steps (five, for California and some other states!):

1.Break out the value of the land separately from the structure. Land is not depreciable. Here’s a tip: Many times the value of a bare lot in the area plus the cost of the construction does not equal the total purchase price. The professionals compare the assessor’s statement of value for the land and building with the purchase price. Use the same ratio that the assessor used for land to building against the total price for your property to determine the value ratio between land and building.