Taxpayer purchased a trailor(mobile home) 15 years ago and placed it on a rented lot in a mobile home park. She has lived there since the purchase and recently closed on a newly constructed ranch type home. Her realtor implied that since she had a "title" and not a "deed" to the mobile home that it would not be considered her principal residence and that she would be eligible for the first time homebuyers credit.
I would appreciate your thoughts on this.
Thank you, George L Anthony snipped-for-privacy@atlanticbb.net
It's not completely irrational. The statute isn't a model of clarity, and in one part states the credit applies of the taxpayer owns the "property" while in other places it talk about ownership of the "residence." In OP's position she owns the residence but could argue she doesn't own the property.
Under the statute, "principal residence" has the same meaning as under section 121. Does the exclusion from tax apply to mobile homes? If so, she's out of luck.
Well, HUD doesn't make the tax rules. Under the implementing statute "principal residence" means the same thing it does under section 121 which is the tax credit for sale of a principal residence.
I was not able to find anything in the statute, regulations or tax court cases dealing with whether mobile homes are a "princial residence" for this purpose.
The "applicable regulations" regarding permanent foundations may be found here:
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Few mobile homes placed on rented lots 15 years ago would meet the permanent foundation criteria. Most are done with concrete blocks, vinyl skirting, and (maybe) hurricane tie-down straps.
From Sec. 121 regulations: ================================================================ (b) Residence?(1) In general. Whether property is used by the taxpayer as the taxpayer's residence depends upon all the facts and circumstances. A property used by the taxpayer as the taxpayer's residence may include a houseboat, a house trailer, or the house or apartment that the taxpayer is entitled to occupy as a tenant-stockholder in a cooperative housing corporation (as those terms are defined in section 216(b)(1) and (2)). Property used by the taxpayer as the taxpayer's residence does not include personal property that is not a fixture under local law.
================================================================ It has been well established that taxpayers who live in a mobile home as their main home meet the definition in Sec. 121 for excluding gain on a sale. There is no requirement that the home be permanently fixed. There is no requirement that the taxpayer own the land upon which the home sits.
As the taxpayer in question appears to have used the mobile home as his/her main home during the last 3 years, the taxpayer would not qualify for the first-time homebuyer credit.
Since she owned the mobile for the last fifteen years I assume you would prefer that a mobile home *not* count as a principal residence thus allowing her to claim the first time homeowner credit. Right?
Per the last sentence of the cite, would not the taxpayer need to look to local law for a definition of fixture in his/her state (which may require that the mobile home be permanently affixed, taxed as realty, etc)?
I believe the "There is no requirement...." statement you quoted is an opinion of the previous poster as it is not wording contained in the cited reg. The reg addresses "Exclusion of gain from sale or exchange of a principal residence" and may have no bearing on the first-time homebuyer credit. If, as suggested by some, definitions in this reg apply also to the homebuyer credit, the "does not include personal property that is not a fixture under local law" exception should also apply. In that case, a mobile home owner seeking benefit of the first-time homebuyer credit would likely want to show that his/her mobile home met the exception (i.e. was not a fixture under local law). For example, Florida Statute 212.06(14)(b) says a mobile home is not a "fixture" unless assessed as real property. Definitions in other states may vary, but most will likely address the issue.
The Sec 121 definition also applies to cancellation of debt exclusion, but I haven't seen anything in writing where you can apply it to Form 5405. Barring clarification from the IRS, I am going to use the instructions for Form 5405: "Your main home is the one you live in most of the time. It can be a house, houseboat, housetrailer, cooperative apartment, condominium, or other type of residence."
Of course it has a bearing on the credit. The statute that implements the first-time homebuyer credit states that, in determining whether someone owned another home in the last three years, you look at the definition under §121. Statutes trump regulations, remember?
Sorry, I missed the reference in your earlier post clarifying the link to Sec 121, hence my use of "may have no bearing". I don't see a conflict between the statue and the reg. Specifically excluded from the definition of residence is personal property that is not a fixture under local law. Accepting the general definition of residence without determining whether the "under local law" exception applies to the mobile home could result in the unnecessary forfeiture of the $8,000 credit.
When a houseboat can be considered your main home (see instructions for Form 5405), I don't think the IRS is going to rule in your favor.
I do think there is a great need for the IRS to issue clarification, but I can't believe someone can buy a mobile home and be eligible for the credit even if they've owned an interest in one in the past three years.
But, according to the statutes, amplified by the reg, the boat, like the mobile home, would not meet the definition of residence if it was not a fixture under local law.
Interesting read here wherein Florida's Attorney General concludes a boat is not affixed to real property "under these circumstances" but doesn't rule out the possibility:
I haven't taken a survey of the laws of all the states concerning this issue. Have you? The cases I have seen indicates that some states may go one way and others go another way.
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