What is the basis of a house purchased for $200,000 with a tax assessment of $170,000 for the house and $20,000 for the land?

The basis of a house purchased is generally determined by the total cost incurred to acquire the property. This typically includes the purchase price, which in this case is $200,000. However, for tax purposes, the basis may be allocated between the land and the building.

In this scenario, the house has a tax assessment that breaks down the value into $170,000 for the house and $20,000 for the land, totaling $190,000 in assessed value. This allocation is important because it reflects how the value of each component contributes to the overall basis. The basis of the land is $20,000, and the basis of the structure (house) is $170,000.

When determining the basis for depreciation or other tax benefits, one would typically consider the fair market value at the time of property acquisition. In this case, the basis would primarily be aligned with the total purchase price of the property, which is indeed $200,000.

This analysis explains why the most accurate basis in assessing the property value for tax purposes is $200,000. The total basis reflects the entire investment made, not merely the components of land or house assessed separately. Thus, while the choices might suggest varying figures, the appropriate total