MACRS Depreciation for Manufactured Homes not anchored to land

[Josh Kroll]

I would greatly appreciate if someone could let me know the correct # of MACRS depreciation years that a manufactured home not anchored to land (e.g. sitting on leased land). Specific links or references to IRS publications would be ideal. Thanks in advance!

[Paul Caputo]

Depends how you use it. If it's rental property it's 27.5 years. If it's commercial property it's 39 years. If it's your home it's non-depreciable. An accountant would probably be able to help you with applying this properly. Since the manufactured home is already separate from the land you're able to skip a step and the purchase price of the home (not including the land lease) is your depreciable cost basis. So you simply divide the purchase price (plus any improvements, based on when they were placed in service) by 27.5 and you get the annual depreciation. This is 3.636% of the depreciable cost basis. You need to adjust the first and last year based on when the property was placed in service: if you placed it in service in October you'd have 3 months worth of depreciation for the year, and the last year would be adjusted up from 6 months to 15 months, 12 months the 28th year and 3 months in the 29th year. 

If you want to read the Tax Code have fun it's thousands of pages. Depreciation is discussed in IRS Publication 946 (How to Depreciate Property), IRS Publication 527 (Residential Rental Property) and IRS Publication 544 (Sales and Other Dispositions of Assets - covers depreciation recapture). There's also the tangible property regulations and dozens of revenue procedures and private letter rulings addressing depreciation. 

If you really want to break it down there are assets in a manufactured home that qualify for accelerated depreciation as tangible personal property, but going through the trouble of identifying such assets at this level generally doesn't make financial sense. 

Does that help?