Mobile Home Park Depreciation


#1

I am looking for advice on the proper method for depreciating a mobile home park. Is 20% land 80% improvements the standard split?

Thanks


#2

Pat,

Unfortunately, with a standard land-lease community, this split won’t work. You are mainly purchasing land. However, you can segmentize the improvements and depreciate them on an approved IRS schedule.

In the past, I’ve actually went 80% land, 20% improvements with a 15 year depreciation schedule. This is conservative and shouldn’t pose any problems if you get an IRS audit.

Steve


#3

You would use the 15 year depreciation schedules for improvements to land rather than the 27.5 year schedules for residential real estate. Obviously, 15 years are better than 27.5 years.