L = land value R = rental value X = resultant land price t = tax rate as % of resultant land price i = interest rate R = i L R = i X + t X i L = (i + t) X X = i L / (i + t) Fraction of rent collected = t X / R = t [i L / (i + t)] / [i L] = t / (i + t) Resultant land price as fraction of land value = X / L = i / (i + t)