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- Title
Taxing Manufactured Homes.
- Authors
BURKHART, ANN M.
- Abstract
Manufactured homes (commonly called mobile homes) are the most important form of unsubsidized affordable housing in this country. They are home to more than 22 million people. The residents are predominantly lower-income, including a large proportion of older people. Yet the costs of purchasing and living in a manufactured home are unnecessarily high because state laws incorrectly categorize the great majority of them as personal property, rather than as real property. As a result, a purchaser must finance the purchase with a chattel loan, rather than with a mortgage loan. Chattel loans have significantly higher interest rates and shorter terms than mortgage loans and, therefore, require substantially larger monthly payments than a mortgage loan. To help make mortgage financing available, the Uniform Law Commission has promulgated the Uniform Manufactured Housing Act, which provides a process for converting a manufactured home from personal to real property. The Act also is designed to create legal parity between the owners of manufactured and site-built homes in matters such as homestead protections, marital property rights, and creditor's remedies. Complete legal parity includes tax parity. However, before creating that parity, understanding the consequences is essential. The sale and ownership of a manufactured home potentially implicates three different types of tax -- taxes on the sale and the financing of the home and the annual ad valorem tax. The tax rates, assessment ratios, exemptions, and credits often differ for personal and real property, and different government entities normally receive the tax depending on whether it is assessed against personal or real property. Changing the property classification also implicates another government charge. If the home is classified as personal property, 42 states require the purchaser to acquire a certificate of title, as is required for a car. In contrast, a certificate is not required if the home is classified as real property. Eliminating the need for a certificate of title also eliminates the fees to obtain and to cancel it. To assess the tax consequences of changing a manufactured home's legal classification from personal to real property, this Article compares the amount of taxes on a manufactured home that is classified as personal property with the taxes on the home if it is classified as real property. The Article analyzes the relevant tax laws of all 50 states. The comparison also includes the certificate of title fees that a manufactured home purchaser incurs if the home is classified as personal property. The results may surprise you!
- Subjects
UNITED States; MOBILE homes; HOUSING; STATE laws; CHATTEL mortgages; MORTGAGE loans; NATIONAL Conference of Commissioners on Uniform State Laws; TAXATION; LAW
- Publication
Tax Lawyer, 2014, Vol 67, Issue 4, p909
- ISSN
0040-005X
- Publication type
Article