Should moving expenses for two mobile homes that I rent out be expensed or capitalized on my tax return?

Mar 05, 2019
I own two mobile homes that I rent out. The expenses I incurred for moving the mobile homes to my land cost $2,000 each. Should the moving costs be expensed or capitalized on my tax return? Does it matter which way I do it, or is it required to be a certain way? 

Generally, all costs incurred to acquire and place an asset into service are required to be capitalized. So, if you purchased the mobile homes, then needed pay to have the mobile homes moved onto your property to rent them out, you would be required to capitalize the $2,000 for each mobile home. This would increase the basis of each mobile home, which you are able to depreciate since you are renting them out. In other words, you will recover the $2,000 you paid for moving each mobile home through depreciation over the life of the mobile home.

If the facts were different and the mobile homes were already placed in service (already being rented) before the move, you may be able to currently expense the moving cost. For example, if you needed to move them from one location to another for a business reason, such as issues with the land they were previously sitting on (flooding, environmental reasons, safety of the area, etc.).

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Daria D. Palaschak, CPA, is a tax partner with Sisterson & Co. LLP in Pittsburgh, Pa.

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