The same map, read by the tax code
Evidence · Depreciable basis
A land-lease community's depreciable basis concentrates in site infrastructure — and the one component the code never touches is the part that has appreciated.
The tax code reads the same map as the land thesis: almost all of a community's depreciable basis is site infrastructure with a 15-year recovery period, and the one component that is never written down — the land — is the one that has historically done the appreciating.
The recovery map
Figure 1.1 · Where the basis sits
The anatomy of a community, by recovery period
Four classes of property, four very different tax lives. In a land-lease community the “actual buildings” column is the small one — which is the entire point.
Recovery periods under the statute · years until fully depreciated
Everything at or under the 20-year line is 100% bonus-eligible — permanently, under P.L. 119-21
Data table
The four components
Site infrastructure
Interior roads and drives, water and sewer lines, storm drainage, site electrical, street lighting, perimeter fencing, signage, pads. Roads, sewers, drainage and fences are named outright in Rev. Proc. 87-56 asset class 00.3.
Personal property
Clubhouse and leasing-office furnishings, laundry equipment, playground equipment, appliances in park-owned homes.
The actual buildings
Clubhouse, leasing office and maintenance buildings at 39 years; park-owned homes at 27.5. In a land-lease community this is the small column. The clubhouse was never the investment.
The land itself
Which is also the component that has historically appreciated (the land thesis). Say both things in the same breath — it is a genuinely unusual combination, and nobody in the sector points it out.
What stays out of fund materials
Four rules for whoever carries this into fund materials: (1) write “acquired and placed in service after 19 January 2025” — the acquisition date selects the rate; placed-in-service is a separate requirement. (2) Leave the asset-class percentage table on the education page; in fund marketing a “25–40%+” figure reads as a projection of this deal’s tax benefit, which no authority supports. (3) Keep real estate professional status out of fund marketing entirely — a limited partner is presumptively passive under sec. 469(h)(2). (4) Disclose that bonus taken on 15-year land improvements is “additional depreciation” under sec. 1250(b)(1) and recaptures as ordinary income at exit — very few sponsors do, and the disclosure is a credibility asset.
Show the work — sources & scope
Nothing here is tax advice or a projection of any investor’s tax benefit; investors should consult their own advisers.
Sources
- P.L. 119-21 (4 July 2025); IRS Notice 2026-11; IRS Pub. 946; Rev. Rul. 2001-60 (Rev. Proc. 87-56 asset class 00.3). https://www.irs.gov/pub/irs-drop/rr-01-60.pdf
- Elevation Capital Group — “The Land Is the Asset” (July 2026); “Cost segregation: why investors love it, and what it takes to use it” (4 August 2026). https://www.elevationcapitalgroup.com/investing/research
