Why Mobile Home Parks Are One of the Best Assets for Cost Segregation

TL;DR: A mobile home park is mostly roads, pads, utility lines and site work, not a building. Those items are generally 15-year land improvements, and 15-year property qualifies for 100 percent bonus depreciation when it was acquired and placed in service after January 19, 2025. That is why a cost segregation study on a park can move a much larger share of the depreciable basis into the first year than a study on an apartment building. On the podcast, park operator Leo Young put the share on his deals north of 70 to 80 percent. Your own number depends on the park.

Why does a mobile home park depreciate differently?

Because the operator usually does not own the homes. That one fact changes the whole tax picture.

An apartment complex ties up most of its cost in the building. Under Section 168(c), residential rental property is recovered over 27.5 years and nonresidential real property over 39. A study pulls the shorter-life pieces out of that building, but the structure itself stays on the long schedule.

In a park, there is very little building to begin with. As Leo Young of Cornell Communities described his business model on our episode on mobile home parks, "you want the residents to own their own home that sits on top of your land and you service the land." What the operator buys is roads, sidewalks, concrete pads, fences, signage and the water, sewer and electric lines that run between the lots.

Why do land improvements drive the numbers?

Because land improvements sit in a short recovery class. IRS Publication 527 (2025) lists land improvements, including "roads, shrubbery, fences," as 15-year property. Roads, pads, fences and site utility lines that serve the lots generally land there. I explained the category in more detail in what counts as a land improvement.

How big is the 15-year share? No IRS source publishes a typical percentage, so the honest answer comes from people who run these deals. Leo Young said that on his parks, "we see north of seventy, eighty percent of the purchase price" in those categories. On the same episode I said the studies I see on manufactured housing communities often land well above the 40 to 60 percent range commonly quoted, while a typical apartment building comes in around 20 to 40 percent. Treat all of those as practitioner experience, not as a rule. Utility setup matters a great deal: public water and sewer, wells and septic systems all change the mix.

One correction to how the number gets quoted. The percentage that matters is a share of depreciable basis. Land never depreciates. Publication 946 (2025) says it plainly: "You cannot depreciate the cost of land because land does not wear out, become obsolete, or get used up."

How does 100 percent bonus depreciation change the math?

It lets the whole 15-year share come off in the first year. IRS Notice 2026-11 describes the One Big Beautiful Bill Act's "permanent 100 percent additional first year depreciation deduction for qualified property acquired and placed in service" after January 19, 2025. Qualified property generally means property with a recovery period of 20 years or less, so 5, 7 and 15-year property all qualify.

Two dates decide your rate. The property has to be acquired after January 19, 2025, and a written binding contract signed earlier pulls the acquisition date back to the contract date. The deduction then falls in the year the property is placed in service, not the year you order the study.

Here is the deal Leo walked through on the episode. His firm bought a park on city water and city sewer for $1.05 million, and he said the study came in at close to $800,000 of depreciable basis in the fast categories. That is his figure from his own deal, and it is a good picture of why operators like this asset.

Who can actually use a deduction that size is a separate question. Under Section 469, rental activity is generally passive. A real estate professional who materially participates can use the loss against other income. A passive investor can use it only against passive income, and the rest carries forward. Run that question with your tax professional before you count on the number.

When should you order the study?

The study does not set the tax year. The placed-in-service date does. Leo said his firm gets a quote during underwriting and commissions the study in the first year after closing, so the report is done well before filing season. That sequence works because nothing is lost by waiting a few weeks, as long as the study is finished before the return for the placed-in-service year is filed.

Why does a park need an in-person site visit?

Because the most valuable property is underground. Water lines, sewer mains, electric feeds and septic tanks cannot be fully seen or photographed once they are buried, and a desktop review or a drive-by cannot value them.

The IRS Cost Segregation Audit Techniques Guide, Chapter 4, says "a quality study for acquired or used properties includes a site visit, as well as photographic evidence." On a park, that visit has to be done in person by a trained professional, backed by site plans, utility maps and surveys. Giving the engineer those documents, plus an on-site contact who knows where the lines run, makes the study more complete and easier to defend.

Is a mobile home park worth a cost segregation study?

Often, yes. The same thing that makes a park unusual to own, not owning the homes, is what puts so much of its basis into short-life property. The size of the benefit still depends on the park's utilities, on whether you own homes, and on whether you can use the deduction. To hear Leo explain how operators think about these deals, listen to the full episode with Leo Young.

If you own a park or are about to buy one, the no-cost analysis tells you what an engineering-based study would likely find and what it would be worth to you, before you commit to anything. No obligation and no pitch. If a study will not pay for itself on your property, I will say so. Book a time at calendly.com/david-wiener/cs or call 770-224-8504, option two. Cost segregation, 179D and R&D credit studies are delivered through my relationship with CSSI (Cost Segregation Services, Inc.).

This article is educational and is not tax, legal, or accounting advice. Every situation is different; work with a qualified tax professional before acting on any strategy described here.