Can mobile homes be depreciated? (2023 Update)

One can't 179 a [real-estate] rental property.

One cannot "179" property converted from personal to income generating use. One also cannot "179" property unless it is being used in a trade or business.

He bought something in order to rent it out. I see no conversion from personal property to income generation, and buying and renting out stuff certainly sounds like a business.

Seth

I misinterpreted the word, "used." My bad.

However, residential rental is considered a "production of income" activity covered by IRC Section 212, NOT a trade or business (covered by IRC Section 162). Section 179 is available only for certain depreciable assets used in a trade or business. Therefore, section 179 is not available in this situation.

[Mobile home bought and rented out]

Would it matter what else is included? I agree that renting out a mobile home on land as a residence is Section 212. What about just renting out a mobile home, where the renter is responsible for finding a place to put it (or can just travel around with it)? Renting a car or truck is a business, so where is the line drawn?

Seth

Renting out vehicles is different from renting residential real estate.

For real estate, the line is drawn at the length of the rental period (7 days or less points to a trade or business) and whether other significant services are offered with the rental. There are other rules discussed in the treatment/identification of passive losses and real estate activities.

There's no _real estate_ involved, just a metal box with wheels and some other stuff.

Seth

Whether a mobile home is real estate or personal property depends upon the facts and circumstances of the specific situation including state law.

But, what if someone leases a mobile home, the lessee transports the mobile home to his location and plants it. Could it not be non-real estate for the lessor and real estate for the lessee?

Forgetting for a moment the original post, a mobile home is by itself not real estate. It is a motor vehicle. The owner of such a vehicle can treat it as his home for purposes of taking mortgage interest deductions if the vehicle has cooking, sleeping and toilet facilities and is used as a main or second home. The owner can choose not to treat it as a home. The vehicle does not even have to be parked in the same place every night to be treated as a home.

If you own a mobile home that is "mobile" (not permanently anchored somewhere, it's just parked) and you lease it to someone, you have leased a vehicle. If the lessee decides to rent some space and park or "plant" the home on that space, that has no impact to you the lessor. You have not leased real estate. If the lessee decides to "sublet" or sublease (is that a word) the parked home to another person to use as a home and there is no way for that sublessee to move the vehicle, it seems to me that it has been converted to residential rental property for the lessee, not you.

What does all this mean.... It means a mobile home could be residential rental property with the right set of facts or it can be just a vehicle.

Agreed: That will depend on the type of mobile home. Some "mobile homes" are not motor vehicles because they have no engine. Those are trailers. Furthermore, if they are stationairly planted in one spot and not taken on public roads, they may not even need DMV license plates or regular registration. These are quite different creatures than "campers," which do have engines, driveshafts, etc.,...

"A metal box with wheels" (quoted above) is the trailer type of mobile home. Such is usually treated as a real-estate type structure. Typically, it's leased for months, not days. It's simply not going to be the type of "personal property" to which Section 179 applies.

The OP asked about depreciating a mobile home, the went on to ask if Section

179 expensing was allowable on a mobile home. There have been quite a few answers to the post, many of which made salient observations. I would like to chime in with something that I have not seen addressed, especially considering the track that the thread seems to be taking.

A recent response seemed to head toward the idea that a Mobile Home, having a TITLE from DMV as opposed to a DEED, may be able to be treated like the rental of a car or truck. Let's take a moment of pause -

There is a difference between a Mobile Home and an RV. Mobile Homes have wheels and axels BUT ONLY for the purpose of getting them to where they will remain for an extended period of time. RVs are built with the express intention of being portable on a regular basis. It takes specialized equipment - much like a small over the road truck often referred to as the Tractor part of Tractor-Trailer - and a specialized driver's license - typically a Class A (for multi-part vehicles with a combined gross vehicle weight OVER 26,000 lbs - to move a mobile home. I have never seen an RV that required anything more than a standard driver's license )though they may be out there).

Sometimes it hard to tell a mobile home from an RV. On the Delmarva Peninsula, and in many other resort areas, there are RV parks where people can leave their 12' campers all year AND there are parks where the unit must be a certain length, have an enclosure around the bottom, and cannot be moved without the consent of the park owner/operator.

I've also seen some 40' "land yachts" that look like they are too big for the road. And I've seen dinky little things that people have lived in for an extended period of time. When my wife and built our last house we lived in a 30' fifth wheel trailer on site while they tore the old house down and built the new house - took about 5 months. In at least on place I'm aware of that 5th wheel would have been big enough for the park to allow it to be permenantly parked and used as a home.

You cannot simply say that just because it has a title instead of a deed that it gets treated as a vehicle and can be subject to Section 179. By the same token, for purposes of the gain exclusion from the sale of a home, a boat qualifies as a home. What I can't tell is whether one could take Section 179 on a boat rented as a home. On the one hand it is NOT real estate so it may be allowed, on the other it is a home and I simply do not know if that alone is enough to exclude the use of Section 179.

What I do know is that you have to look to the use of the item. If the unit in question is parked in a place where homes are generally left for years and years and where an enclosure around the bottom of the unit is set in place, and especially if the wheels and axles are removed then you have a residential rental and Section 179 is not allowed.

But if what you have can be hitched up behind a common pickup truck and moved from place to place, it can take advantage of Section 179. Unless, of course, it is permenantly parked, in which case it converts to the real estate rules.

In certain parts of the country, Delaware comes to mind, if one takes a double wide mobile home and encloses the bottom part with something permenant - like brick or block work, even if that enclosure does NOT support the home (typically a mobile home is set on multiple piers to support the weight) then the owner can "surrender" the title to DMV and the county treasurer will issue a Class III Deed. This effectively changes the item from a registered vehicle to real property.

Hope this helps, Gene E. Utterback, EA, RFC, ABA

This is not necessarily correct, as it is a trade or business if certain participation tests are met