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Can manufactured homes can be considered like-kind property for tax purposes under IRC Section 1031

Financial Planning Dentist

Q: I was wondering if manufactured homes can be considered like-kind property for tax purposes under IRC Section 1031.

A: It turns out that the classification of manufactured homes depends on whether they are classified as real property or personal property.

If a manufactured home is permanently affixed to land that the homeowner owns, it can be classified as real property. Just like traditional site-built homes, these manufactured homes are tangible structures that are permanently attached to the land. They have an APN number assigned by the county tax assessor for identification and record keeping. If you receive an annual property tax bill from the county, it confirms that your home is considered real estate and can be used for a 1031 exchange.

On the other hand, if a manufactured home is considered personal property, it means that it is often installed on a temporary foundation on leased land. In this case, the homeowner has the option to move the home to another location. This classification is similar to that of a vehicle, and the homeowner receives an annual registration renewal from the DMV. Since mobile homes classified as personal property are not considered real estate, they do not qualify for tax deferral treatment under IRC Section 1031.

If you want to confirm whether your home is classified as real or personal property, it’s a good idea to reach out to a Title Insurance company. They can provide you with the necessary information about the classification of your property.

Hope this helps you understand the distinction between manufactured homes classified as real property and personal property for tax purposes!

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