Discussion:Accounting change for mobile home parks

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Discussion Forum Index --> Advanced Tax Questions --> Accounting change for mobile home parks
Discussion Forum Index --> Tax Questions --> Accounting change for mobile home parks

CPASue (talk|edits) said:

26 October 2009

I have a client who owns 2 mobile home parks. When this client came to me, the assets were set up as buildings and land and depreciated over 27.5 years. They do not own any mobile homes just the park. No excuse on my part for not thinking about this. Now they want to do a 1031 exchange for another mobile park. The seller's accountant has explained correctly that mobile home parks are land improvements and depreciated over 15 years. He is encouraging them to apply to the IRS for an accounting change to the 15 year life. The depreciable assets are about $2 million and we are 10 years into the 27.5 life.

What is the likelihood of this being approved?

How long does this take?

Does it make sense to generate this kind of deduction in one year?

What are the recapture ramifications?

Can we 1031 one mobile park (building and land) into another mobile park (land improvements and land) and use the correct life on the new exchanged property?

Any thoughts or insights would be appreciated. Please be kind, just looking for some direction.

Kevinh5 (talk\|edits) said:	26 October 2009
I see no reason why a US mobile home park and improvements (real estate) couldn't be 1031'ed into ANY qualified US real estate.

Harry Boscoe (talk\|edits) said:	26 October 2009
So, this is still a very valid and very good question about the change in method, right?

Kevinh5 (talk\|edits) said:	26 October 2009
I don't know that you have to apply to the IRS for a correction to depreciation - I think this is an automatic consent acceptable change.