Asset Depreciation Schedules for Mobile Home Parks: Done Right the First Time

A depreciation schedule that treats your entire mobile home park as a single 39-year asset is not a depreciation schedule — it’s a missed opportunity sitting in a spreadsheet. Roads, utility lines, fencing, park-owned homes, and site improvements each have their own IRS-defined useful life. When they’re all lumped together, you overpay taxes every single year until you sell.

Most MHP owners inherit bad depreciation schedules from the accountant who handled their acquisition closing. They don’t discover the problem until they hire someone who knows what to look for. By then, years of excess tax payments have already gone out the door — though a properly filed Form 3115 can often recover them.

The MHP Depreciation Landscape

Mobile home parks contain more distinct asset categories than almost any other real estate class. The IRS organizes these under the Modified Accelerated Cost Recovery System (MACRS), and each class has rules about bonus depreciation eligibility, applicable depreciation method, and conventions that affect your first-year deduction.

Why MHP Depreciation Schedules Go Wrong

The most common error is blanket classification. A CPA unfamiliar with MHP properties sees “mobile home park” and assigns the purchase price (minus land) to 39-year nonresidential real property. Roads don’t get separated. Utility infrastructure doesn’t get separated. POHs don’t get separated. The entire park depreciates on the slowest possible timeline.

A second common error is misclassifying park-owned homes. POHs that are titled as personal property and not permanently affixed to a foundation are generally 5-year assets — not 27.5-year residential rental property. Treating them as 27.5-year assets not only slows depreciation but also affects bonus depreciation eligibility. See IRS Publication 946 for the full MACRS asset class rules.

MHP Depreciation: Common Errors vs. Correct Treatment

Frequently Asked Questions

How often should my MHP depreciation schedule be updated?

Every year, and every time you make a capital improvement. CapEx additions to roads, utilities, or POH inventory each start a new depreciation stream. If you’re only updating once at acquisition and never revisiting, you’re likely underreporting deductions.

What happens to the depreciation schedule when I do a 1031 exchange into a new park?

In a 1031 exchange, the carryover basis from the relinquished park continues on its original depreciation timeline. The boot (if any) and any excess purchase price over carryover basis create new depreciation streams. Managing this correctly at acquisition is critical for long-term accuracy.

Can I take bonus depreciation on park-owned homes I purchased this year?

POHs classified as 5-year personal property are generally eligible for bonus depreciation under IRC Section 168(k), subject to the current phase-down schedule. The bonus depreciation percentage has decreased from 100% and continues to phase down annually — timing your POH acquisitions matters.

Does the depreciation schedule affect my ability to refinance?

Lenders reviewing your financial statements will look at your NOI, and depreciation flows through to your net income figure. Maintaining a clean, well-documented depreciation schedule supports cleaner financial statements and a cleaner lender review process.

What software or format do you use to track MHP depreciation?

We maintain depreciation schedules in formats compatible with your tax software and financial reporting needs. Every asset entry includes IRS asset class, acquisition date, original cost, applicable method and convention, and accumulated depreciation — documented in a way that survives an IRS audit.

This content is for educational purposes only and does not constitute tax or legal advice. The MHP Accountant recommends consulting a qualified CPA for advice specific to your situation.