Q. I just found your Blog. It is tremendous and has excellent advice.
I am hoping you can lead me in the right direction with my question.
I owned an RV site. I bought it in 2006 and used it personally until 2011. In 2011 I converted it to full time RV site rental use. It has been in a rental program managed by the park company (they work for the owners) since then. It has a concrete pad, a small dog house with electrical links and a small storage shed. It has had no personal use since 2011. I sold it in 2014 at an approximately a 50% profit.
The Federal tax books identify all sorts of properties that one may own and how to treat them tax wise - residential, real, and etc. However, they do not mention RV site.
I am struggling with how to label the property and what forms to use for the sale. Do you have any suggestions?
A. RV lots are like any other lot anywhere: real property. Improvements are just that. When you sell your RV lot, your tax basis would be the purchase price together with the cost of purchase along with the capital improvements you added to your lot. In this case you added a concrete pad, dog house, a storage shed, and electrical connections. The total of this becomes your "tax basis" and when deducted from your net selling price results in either a capital gain or loss. This is reported on form 8949 and ultimately Form 4797 (if you took any depreciation on the capital improvements) and Schedule D. Thanks for a good question!