Yes. I know it sounds absurd, but such is tax law. Although mobile homes are a vehicle, they are ‘housing’ and are subject to that long 27.5 year depreciation schedule even if they are decrepit and won’t last that long. If/when you send them to the dump, you just write-off any remaining value and take a one-time loss.
That said, I’ve just discovered a very, very significant tax loophole called the De Minimis Safe Harbor Election. I’ve run this by my CPA; he researched it and agrees with the implications I lay out below. (I just wish he had discovered this himself back in 2016 when it came into effect and told me about it…!)
Tax law now says that any line item on an invoice that is $2,500 or less can be expensed.
So whereas you might otherwise receive an invoice for:
$10,000 - Total for Repairing Mobile Home
You now need to ask your vendor to break out his work components so that each line item is $2,500 or less, like this:
$2,500 - Painting House
$2,500 - New Roof
$2,000 - New Floors in Bedrooms
$2,000 - New Floors in Kitchen and Livingroom
$1,000 - Labor
$10,000 - Total for Repairing Mobile Home
As long as the individual line items are $2,500 or less, they can be expensed. Not only will this greatly reduce your taxes, it will simplify your bookkeeping because you no longer need to keep depreciation tables. You can expense everything.
Unfortunately one can’t go back and re-file previous years. You need your CPA to make this election at the time your taxes are filed. So your existing depreciation tables are basically ‘fixed’ and you’ll just run them out.
I’ll be doing a podcast on this shortly:
To your continued success,
-jl-
