Filing my taxes properly on my mobile home rentals.

Filing my taxes properly on my mobile home rentals.

Flipper / Landlord · Tyler, TX · Member since 2016 · 255 posts · 126 votes

Back in the end of 2015 i bought 6 acres that i have been developing since. This past year in 2017 i placed to mobile homes on the land, did the septic sytems, electric service, water service, etc. I officially was done developing in November 2017 and had both trailers rented by December. 

I am using Turbo Tax to do my taxes and what i am doing is i am adding the land as the rental real estate and adding Assets to that property(the mobile homes). All under one rental income basically.
I was listing each mobile home seperately but an AE agent from Turbo Tax and i got on a video conference and he explained that was wrong. That As i kept adding mobile homes to this land, that i would simply keep adding on "Rental Real Estate Assests" to the property. The mobile homes are going under the tab "Assets/ Depreciation Property, improvements" So i have both Mobile homes under this as well as some improvements i made to the land. I wanted to list all my expenses i incurred(Water meter, septic tanks,electric,propane) under expenses but they said that wasnt the correct way. That i had to add it to the cost basis of the mobile homes. So i added all that up and added to what the trailers cost me. So now all that is being depreciated over 27.5 years. Does that sound right ? If i place all this under expenses i get a better refund it seems like but according to them that isn't the right way.

Also, IF i put my Mobile Home rentals under Land improvements instead of Rental Real Estate, I get a huge deduction and instead of 27.5 years of depreciation i get a 15 yr depreciation. If i put the Mobile homes Under Land improvement the cost shows up under Special Depreciation Allowance.  They said the correct way to do it was to list them under "Rental Real Estate" which give me $0 dollars under these two things below.

Special Deductions   Section 179 deduction$0
Special Depreciation Allowance $0

I have my full time job and they took almost 10k from me in Fed Tax Withheld. So i am trying to get as much refund as possible. But i want to do it the right way. Correctly from the start. I do not want to open up a can of worms with the Tax Man. What do you all think? Tips, Advice, constructive criticism welcome :)

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Ryan MurdockPro Member
Rental Property Investor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
8y

I used to use Turbo Tax - it's great - but once you start complicating your returns with tricky real estate investments it's usually worth paying a real CPA to help you out. One misstep on your part can end up costing you a lot more than your CPA's fees - either by missed deductions or "opening that can of worms" you are trying to avoid. I'd engage an actual professional.

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  • Ryan MurdockPro Member
    Rental Property Investor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
    8y

    I used to use Turbo Tax - it's great - but once you start complicating your returns with tricky real estate investments it's usually worth paying a real CPA to help you out. One misstep on your part can end up costing you a lot more than your CPA's fees - either by missed deductions or "opening that can of worms" you are trying to avoid. I'd engage an actual professional.

  • Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    8y

    They have to be depreciated as land improvements. 

  • Flipper / Landlord · Tyler, TX · Member since 2016 · 255 posts · 126 votes
    8y

    @Steven Hamilton II so dont do them with the "Rental Real Estate" Depreciation ? i should put them as land improvements instead ? If i put them down as "Land improvements" instead of "Rental Real Estate" they get depreciated over 15 years instead of 27.5 years.

  • Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    8y
    Originally posted by @Maugno M.:

    @Steven Hamilton II so dont do them with the "Rental Real Estate" Depreciation ? i should put them as land improvements instead ? If i put them down as "Land improvements" instead of "Rental Real Estate" they get depreciated over 15 years instead of 27.5 years.

     Maguno,

    This is why you should hire someone. Land improvements would be items such as the septic systems, paving, trees fences, etc that you did to the land.  These are depreciated over 15 years.

    The mobile homes themselves are depreciated over 17.5 years.

    The land itself is not depreciable. 

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