Marina Owners: You're Already Doing the Hours. The Tax Code Will Reward You.

The FLOHOM Tax Advantage · Part 2: For the Marina Owner

A plain-English summary of the FLOHOM Tax White Paper (2026 Edition), prepared by Hall CPA PLLC, written for marina owners and operators. Part 2 of a three-part series.

Most marina slips earn around $8,000 a year. Amenitized with FLOHOM units, that number can climb to more than 5x that. That's the revenue story, and it's the reason most operators take the first call.

But there's a second story underneath it, a tax story built for operators specifically. You already do the one thing that's hardest for an outside investor to prove. The code is set up to reward you for it.

Start with the asset

A FLOHOM is a vessel under the tax code, not a building. Revenue Procedure 87-56, Class 00.28 gives it a 10-year class life, §1245 personal property, the same category as yachts and barges. That classification is the whole game, because bonus depreciation only applies to assets with a class life of 20 years or less. A 27.5-year building never qualifies. A FLOHOM does.

And it isn't a stretch. Under Treasury Reg. §1.856-10, "real property" has to be permanently affixed, judged by how it's attached, whether it's meant to stay indefinitely, the damage removal causes, the permanence of the arrangement, and the cost to move it. A FLOHOM fails every factor: a mooring line isn't permanent, a slip lease isn't indefinite, and the unit moves without damage. It's a vessel.

Under the One Big Beautiful Bill Act, signed July 4, 2025 and now permanent, 100% of a FLOHOM's cost is deductible in the first year it's placed in service (for property acquired and placed in service after January 19, 2025). On a $400,000 unit, that's a $400,000 first-year deduction, versus $160,000 under the old 40% rate.

The catch that stops most investors, and why it doesn't stop you

A deduction is only useful if you can apply it against income. Under §469, that requires the activity to be active, meaning you materially participate. The most reliable bar is the 500-hour test: more than 500 hours a year of genuine involvement, per activity. For an individual with three units, that's 1,500 hours. A real climb.

You already do the work.

The grouping election: your single most valuable move

Under Reg. §1.469-4, you can make a grouping election, treating your FLOHOM units and your existing marina as a single activity for the participation tests, as long as they form an "appropriate economic unit." The IRS weighs five things:

• Similarities and differences in the businesses
• Extent of common control
• Extent of common ownership
• Geographic location
• Interdependencies between the activities

Multiple units run through one management platform, under one owner, at one location? That's a strong case to group.

Here's why it matters so much. Once grouped, the hours you already spend running the marina count toward the test, and those hours typically blow past the 500-hour bar on their own. So your FLOHOM units are treated as active, and the bonus depreciation flows through as a non-passive deduction against your income, without you logging almost any incremental time on the FLOHOMs themselves. For a marina operator, that is the single most valuable election on the table.

Two things to plan around: the election is made on the first return where it applies, and it's hard to undo. And it doesn't require all-or-nothing geography. If a unit sits outside your home market, participation can still count, since pricing, marketing oversight, insurance, and managing the booking presence can be handled remotely. What matters is the nature and documentation of the hours, not the distance.

If grouping isn't the right fit, passive still works

Say you'd rather keep the FLOHOM activity separate and passive. The depreciation doesn't vanish. It becomes a passive loss that shelters your other passive income (other rentals, businesses you don't run day-to-day), and any excess carries forward indefinitely on Form 8582 until you have income to absorb it or you sell. One investor in the paper uses exactly this approach to collect $120,000 of annual rental income tax-free for years. The point: there's a tax-efficient path whether you want to be hands-on or hands-off.

Reporting, and the exit

A FLOHOM is personal property, so its income lands on Schedule C, not the Schedule E you may use elsewhere. That brings potential self-employment-tax exposure on profits if you're continuously involved, worth modeling, especially against your state's rules (California taxes LLC income regardless of election; Texas and Florida have no state income tax). A FLOHOM is not eligible for a 1031 exchange, but selling one unit and buying another in the same tax year lets the new unit's bonus depreciation absorb much of the gain.

And know the catch: at sale, depreciation is recaptured as ordinary income at your marginal rate (up to 37%) under §1245(a)(1), with long-term capital gains (0, 15, or 20%) on any appreciation above cost and a possible 3.8% NIIT. It's a timing play, powerful when the deduction lands in high-income years, not free money.

The bottom line for marina owners

More revenue per slip. A six-figure year-one depreciation deduction. And the participation hours already sitting on your books, ready to make that deduction active through one election. Few operators realize the grouping election is even on the table, which is exactly why it's worth a conversation before your next return.

Let's amenitize your marina. Start Your FLO →https://flohom.com/flownership

Next in the series: Part 3, for waterfront hotels and RV parks integrating floating inventory.


Prepared from the FLOHOM Tax White Paper (2026 Edition), authored by Hall CPA PLLC. The per-slip figures reflect FLOHOM's operating model; grouping depends on facts and circumstances. This is general education, not tax advice. Talk to your tax advisor before you commit to a strategy.