Question

Question: What is the difference between land and land improvements?

Short answer

Cost of land includes all the expenditure involves in making that property ready to use whereas land improvements are the cost of improvements and addition to land.

Step-by-step solution

Land

Costs of land include expenditures necessary to make that property ready for its intended use. When land is purchased for a building site, its cost includes the total amount paid for the land. It includes: -

• Purchase price

• Attorney’s fees

• Title

• Recording fees

• Commissions

• Back taxes

• Mortgages

• Clearing

• Removing old buildings, etc.

Land improvements

Land improvements are improvements and additions to land that have limited useful lives. Land improvements depreciate over the estimated useful life. Examples: -

• Parking lots

• Driveways

• Walkways

• fences

• Private roads

• Fences

• Sprinkler system. etc.