Akron, OH · Member since 2012 · 77 posts · 2 votes
On my residential rentals, I've always expensed small repairs (bad toilet, plumbing, etc) and any real "improvement" like new cabinets, total rehab, etc. depreciated.
Now that I'm looking into mobile home parks and self-storage, I have some questions:
1. Out the gate, if you purchase an existing property, how long and what do you depreciate for MHP's and self-storage? MHP's I believe you depreciate the roads, water lines, etc over 15 years. Is that right?
What about self-storage? That seems more complicated, since you have a lot of pavement and infrastructure, including security equipment, but also the buildings themselves. How is that typically done?
Also, in general, is there a specific rule for what constitutes a "repair" and what is a "capital expenditure"? Until a couple years ago I had someone just do my taxes for me, and the last 2 years I've only had minor repairs on my existing rentals, so I'm not sure myself.
Joe Smith: Better late than never right? My understanding, and please bear in mind that I am far from a CPA, is that SS is generally depreciated over 39.5 years just like other commercial real estate. That being said, there are many components of a facility that can be depreciated faster (Fixtures, equipment, parking lots etc).
A full analysis of depreciation can be ascertained by getting a cost segmentation study done. Generally speaking this will only make sense for larger, high value facilities. The study itself can cost $20K , so the tax savings garnered through the accelerated depreciation need to be hefty enough to justify this upfront cost.