Hello WSO Community!
I am working to acquire a portfolio of manufactured housing communities and have a few questions regarding depreciation I was hoping to find answers to or be pointed in the right direction. My questions are:
1. Other than the land component, is the infrastructure at the community (roads, pads, water & sewer lines, etc.) eligible for depreciation over a 15 year period? Would Park Owned Homes qualify as personal property and be depreciable over a 5 year period?
2. If the above is true, then would these items also qualify for the Bonus Depreciation rules and be 100% depreciable in year 1?
3. What are the allowable deduction limits? If the year 1 Bonus Deprecation exceeds the deduction limit are you allowed to carry forward these deductions in subsequent years until they are exhausted?
4. We have a group of investors, I'm assuming the depreciation benefits can be passed-through to this group in order to offset our cash distributions. Is that correct?
Thank you!
Speak with a CPA. They can provide you with answers better than a forum of random people can (and they do this every day).
lol, thanks for the insight.
You’re coming to a forum filled with finance and development folks... you asked for advice or to point you in the right direction. It’s probably much quicker to pick up the phone and call a CPA than wait for someone on here who isn’t an accountant to give you “advice” with you not actually knowing if they are qualified to do that. Just my two cents.
Real estate activity usually operates at a passive loss for tax purposes, so investors typically don't see a tax impact until they liquidate the investment or have distributions in excess of basis, unless they're real estate professionals. So the benefit of depreciation is limited.
Obviously that's the general case and you should discuss specific questions with a professional.
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