Depreciation of mobile home park?

[Unregistered]

I have a client that just bought a couple mobile home parks. He does not own any of the homes. He just owns the land and charges lot rent. Can he get an appriasal of the land and take the difference he paid for the park as Goodwill and depreciate it over 15 years?

[Bees Knees]

You cannot depreciate land.

But you can amortize goodwill over 15 years. So to answer your question...yes.

[JON]

Pads

The pads are land improvements, the utilities are run to the pads, streets run through the park, playground equipment and equipment for upkeep of the park. It can be very profitable to buy the homes in turnover areas, buy cheap , refurbish sell high-can use CDs and build a nice cash flow. Obviously in raw land has to be set up separately, depands on the state it real estate tax statements give you an idea of land value.

[Unregistered]

The pads are land improvements, the utilities are run to the pads, streets run through the park, playground equipment and equipment for upkeep of the park. It can be very profitable to buy the homes in turnover areas, buy cheap , refurbish sell high-can use CDs and build a nice cash flow. Obviously in raw land has to be set up separately, depands on the state it real estate tax statements give you an idea of land value.

They did not break down the selling price in the sales agreement. Would you just assign a value to the land (either appraisal or using the assessed value per the property tax bill) and apply the rest to goodwill? We could probably try to break out land improvements but it would be depreciated over 15 years anyhow. I would think it would be easier to just apply the difference to goodwill. Any thoughts?

[Bill Tubbs]

Break it out

They did not break down the selling price in the sales agreement. Would you just assign a value to the land (either appraisal or using the assessed value per the property tax bill) and apply the rest to goodwill? We could probably try to break out land improvements but it would be depreciated over 15 years anyhow. I would think it would be easier to just apply the difference to goodwill. Any thoughts?

You should break out the purchase price between land and improvements, and then if any is left over it can go to goodwill. Actually, have client break it out. If client is clueless, then I would check the assessed values of the land and the improvements and use them as long as they are reasonable.

Bill

[JON]

Raw land

The value in general should be given on the real estate statement. That will give you a ball park to start.

[Unregistered]

The value in general should be given on the real estate statement. That will give you a ball park to start.

What real estate statement are you referring to? If you talking about the closing statment. The breakdown was not given.

[JON]

Land of 10,000 taxes and others

If the state you are in has real estate taxes they usually have arrived at some kind of value to assess the taxes. Those records, as here, usually include valuations. Some are, more accurate than others, but they are always a good starting point.

[dsi]

If the state you are in has real estate taxes they usually have arrived at some kind of value to assess the taxes. Those records, as here, usually include valuations. Some are, more accurate than others, but they are always a good starting point.

As pointed out, look at the assessed values first. I usually have the client tell me what the values are because it is not my job to figure it out.