Anyone here ( @frankrolfe ideally ) have a view on the 100% bonus depreciation rules and whether they can be applied to the infrastructure component of deals as well? Seems pretty clear that the “personal property” element of homes/equipment qualifies.
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@Jefferson Have you developed a view on this at all? Imagine LPs are asking or will if they haven’t yet.
I’d like to know the same thing. These new rules are potentially huge for RE investors but I haven’t seen much discussed on this forum.
We’re in the process of buying a park and I’m curious if others are getting aggressive with accelerating their depreciation, especially those buying parks in 2018 as the year the property is put into service is the most critical year. And for those using this 100% bonus depreciation are you getting cost segregation studies done? I know those are very common in apartments but not so much with MHP’s.
Thoughts? @Jefferson @frankrolfe @CharlesD @Deleted_User_ME @jhutson
TIA
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My understanding of the concept of bonus depreciation is that once a business has hit the maximum write off cap for the tax year (which is now 1MM as part of this legislation), you may then utilize these “bonus depreciation” items. I don’t know about you, but I have not yet written off 1MM in a tax year, so I have never needed to claim bonus depreciation on top of that…
I think what the OP is asking is whether they can write off 100% of an MHP infrastructure upgrade in Year 1 as part of the new Section 179 legislation. My gut tells me no, because it’s not considered qualifying property. Section 179 specifically EXCLUDES certain improvements to a given property, specifically, " Land improvements include swimming pools, paved parking areas, wharves, docks, bridges, and fences."
Additionally, it’s unclear whether MHP’s are excepted (meaning you cannot write off as part of Section 179) in general because they are used in connection with lodging. Motels, RV Parks, etc where the people staying there are considered transient are an exception to this, but MHP’s are not discussed. And from a water system perspective (e.g. if you have an EPA compliant water well) they are not considered for transient usage…
All this to say I think you need to do more investigation with a real tax attorney (not me) if you’re serious about using this.
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I would be happy to help answer any questions you have about the bonus depreciation rules. I am a Senior Account Executive with Cost Segregation Services Inc. (CSSI). Our firm is the leader in the industry and is comprised of tax attorneys and cost engineers. We have done over 20,000 studies covering all property types - including MHPs. We also work with your CPA to get your properties compliant with the 2014 Tangible Property Regulations.
You’re correct, there is a lot of personal property associated with a MHP… i.e. roads, utilities, owned MHs, etc!
You can give me a call at my direct line @ (740)801-0502 or shoot me an email with some basics about your property and I can work through a free pre-analysis to determine a conservative estimate of what we should find upon a full study.
I have some PDF files on my LinkedIn profile that will answer some basic questions, and feel free to connect on there as well at : https://www.linkedin.com/in/chad-bradford-72b6aa7/
Thanks!
Chad Bradford
Senior Account Representative, CSSI
President, AUTA Financial Group, LLC
Phone: (740)801-0502
Email: weAUTAtalk@gmail.com
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Interested in how I can use Section 179 to write off 100% of the value of roads, sidewalks, utilities, etc. I am getting mixed reviews/opinions - do you have a position? And citation?
I have not researched it, but how does classifying the improvements as personal property interact with a 1031 exchange when you sell? I think the 2017 tax reform act limited IRC 1031 to real property exchanges only.
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