What Is New Jersey's Land to Building Value Ratio?

Why the land carve-out comes before any depreciation math

Every cost segregation study starts with the same step: pull the land value out of the purchase price. The test is simple: the building depreciates and the dirt underneath it never does. Get that split wrong and every number after it, the 5-year bucket, the 7-year bucket, the first-year deduction, is built on a bad foundation.

Most owners never see a land to building ratio computed from anything real. They see a rule of thumb, 80% building and 20% land, repeated so often it sounds like law. It is not law. It is a guess, and New Jersey's own property records show how wrong that guess can run, in either direction, depending on where the property sits.

What New Jersey's own assessment data shows

New Jersey's Division of Taxation publishes the MOD-IV assessment file for every parcel in the state, updated each tax year. Two fields on that file, land value and improvement value, are exactly what a depreciation schedule needs: the assessor's own split between the dirt and the structure sitting on it, for every taxed property in the state, not a national average.

The improvement share, the building's percentage of land plus improvement value, is what matters for depreciation math. Flip it around and land's share of that same total tells the same story from the other direction. The table below runs all 21 counties from lowest improvement share to highest, using the median residential (New Jersey property class 2) parcel in each.

Bold names mark the four shore counties this data note highlights: Cape May, Monmouth, Ocean, and Atlantic.

Why Cape May and Monmouth run so much lower than Gloucester and Cumberland

The pattern is not really shore versus inland. It is land scarcity versus land abundance. Cape May and Monmouth carry the lowest improvement shares in the state because the land itself, barrier island lots, waterfront frontage, a short drive to the water, commands a price the structure on it does not. A Cape May rental and its Jersey Shore neighbors up the coast, covered on our Jersey Shore rental page, often sit on land worth more than half the total price before a single board of the house counts.

Ocean and Atlantic counties, also shore counties, do not run nearly as low. Ocean sits at 59.8% and Atlantic at 66.1%, both closer to the statewide middle than to Cape May or Monmouth. A shore county with more inland acreage, more recently built subdivisions, or a mix of barrier island and mainland housing stock does not automatically skew land-heavy. Gloucester and Cumberland, both inland South Jersey counties with lower per-acre land costs and older, larger housing stock relative to lot value, sit at the opposite end, improvement shares above 76%.

The lesson for a specific property is not shore equals low and inland equals high. It is that the ratio moves with local land economics, county by county, sometimes town by town, and a single statewide rule of thumb misses that variation every time.

What this ratio does, and does not, replace

An assessment ratio is a real number pulled from the same records a municipality uses to bill property tax. It is not, on its own, a substitute for an engineered cost segregation study or a qualified appraisal. Assessed value reflects the assessor's methodology and revaluation cycle for that town, not necessarily this year's purchase price or this property's actual construction cost.

What the county median is good for is a sanity check. If a preparer's software defaults to an 80/20 building to land split and the property sits in a county running closer to 45/55, that default is wrong before the depreciation schedule even starts. See how land value and building basis interact for the mechanics of carving land out of a purchase price the right way. An engineered study still does the real allocation, using the actual purchase price, a site-specific land valuation, and the components inside the building. This data note tells an owner what range to expect and why, not what number to file.

Methodology: source, counties, and exclusions

Every number on this page comes from the New Jersey MOD-IV assessment file, tax year 2026, the same state assessment roll every county tax assessor certifies and New Jersey's Division of Taxation compiles statewide. The file carries a land value field and an improvement value field for every taxed parcel in the state. Computed 2026-08-28.

• Counties: all 21 New Jersey counties, full state file, not a sample.
• Class filter: New Jersey property class 2, residential, one to four family homes and condominium units.
• Parcels used: 2,599,560 residential parcels statewide after exclusions.
• Exclusions: 6,273 parcels (about 0.24%) dropped for a zero or blank land value or improvement value, typically a data artifact rather than a real zero.
• Metric: improvement share equals improvement value divided by land value plus improvement value, then the county median across every usable residential parcel in that county.

Commercial parcels (New Jersey property class 4) were computed the same way but are not published here. Several counties fell under 5,000 usable commercial parcels once the same exclusion rule ran, too thin a sample to publish a county median with confidence, so this page holds to the residential figures the full dataset supports everywhere.

Frequently asked questions

Why isn't there a single land to building ratio for all of New Jersey?

Land value depends on local scarcity and demand, not a statewide constant. A barrier island lot in Cape May County or a commuter town in Bergen County prices land far higher relative to the structure than a larger, older lot in Gloucester or Cumberland County. The county medians on this page range from about 44% to 78% improvement share for exactly that reason.

Does this ratio apply to commercial property too?

The same MOD-IV data carries a land and improvement split for commercial parcels (property class 4), and it was computed the same way. Several counties did not have enough usable commercial parcels to publish a reliable county median, so this page reports the residential figures every county supports and describes the commercial computation in the methodology section instead of guessing.

Is the assessed land value the same as what a cost segregation study uses?

No. Assessed value reflects a municipality's assessment methodology and its last revaluation cycle, which can run years behind an actual purchase price. An engineered study allocates land using the real purchase price and, where needed, an appraisal, then classifies the components of the building itself. The county ratio is a starting point for what to expect, not the number a study files.

What is the improvement share of assessed value?

It is the improvement value divided by the sum of land value plus improvement value, both pulled directly from a county's assessment roll. A higher improvement share means the structure carries more of the total assessed value relative to the land under it, generally meaning more basis available to depreciate once land is carved out.

Why does land value matter for depreciation at all?

Land does not wear out, so it cannot be depreciated, only the building and its components can. Every cost segregation study starts by removing land value from the purchase price before classifying anything else. A land value set too low overstates depreciable basis; set too high, it understates it. Real assessment data narrows that guess.