Published by AE Tax Advisors Team • 2025-08-28

RV Park and Campground Owner Saves $142,000 via Cost Segregation

The Client

Gary and Michelle Foster purchased a 75-site RV park and campground in Pigeon Forge, Tennessee for $1.9 million. The park generated $410,000 in gross annual revenue during peak season. The Fosters also earned $120,000 from Gary's electrical contracting business.

The Problem

Their accountant was depreciating the entire property over 39 years at $38,900 per year. However, RV parks are predominantly composed of site improvements -- hookup infrastructure, concrete pads, roads, utility runs -- rather than traditional building structure. The depreciation approach was dramatically undervaluing their deductions.

Our Strategy

RV parks present a unique cost segregation opportunity because the majority of the property value lies in site improvements rather than enclosed structures. Our study reclassified $165,000 into 5-year property (electrical hookup pedestals, water/sewer connections, Wi-Fi infrastructure, laundry equipment), $72,000 into 7-year property (recreation equipment, office furnishings, camp store fixtures), and $210,000 into 15-year land improvements (concrete pads, internal roads, dump station, perimeter fencing, playground, pool deck, landscaping). Total accelerated: $447,000.

The Results

The $447,000 in accelerated depreciation wiped out the Fosters' combined income from the park and contracting business. Year 1 savings totaled $142,000. They reinvested in 15 additional full-hookup sites, increasing annual revenue capacity by $85,000.

Key Takeaway

RV parks and campgrounds are one of the most overlooked property types for cost segregation, yet they often have the highest percentage of reclassifiable components because the property is primarily composed of site improvements rather than enclosed structures.