How to Estimate Land Value

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Land market value can have two different meanings. From the homeowner's perspective, it can refer to the value of the land in which your house sits on. For commercial property, the land value is a function of the rent that can be collected on the property. It is also needed in order to calculate depreciation for investors since you can only depreciate the value of the property less the land value.

Step 1

Determine the land rental value. This is the value of the fee renters are willing to pay for the right to occupy the land site.

Step 2

Determine the land taxes for the property. Look up previous records by going to the county tax collector's office in the country the property in located in.

Step 3

Ask your real estate agent for the capitalization rate for your area. This rate is wholly determined by the market.

Step 4

Calculate the land market value. Subtract the land taxes from the land rental value and divide by the capitalization rate.

Step 5

Hire an appraiser. Appraiser often determine the cost basis for calculating depreciation for real estate investors. The appraiser will provide you with an estimate for the price of the land and the property on the land.

Step 6

Obtain land values for other properties listed in your area. Look up the price listings for homes in your area or go to your county tax collector's office to ask about tax lien sale listings. If there are any in your area, you can use the estimated land value provided by the county tax collector as a proxy.

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