Selling Mobile Homes in the US
Posted date : Nov 4, 2017.
Dear Bird Talk,
We recently bought a manufactured home in Florida. We have heard that if we sell this unit down the road, we will be taxed by the U.S. government. There are many different opinions on this. Can you advise us of the drawbacks of a Canadian selling mobile homes in Florida?
Niagara Falls, ON
Wallace Weylie, CSA legal counsel replies: There are two types of ownership of a mobile home in Florida, and each is treated in a different manner with regard to taxation. If the owner of the unit owns the land as well as the manufactured home, the property is treated as real estate and is subject to the rules of FIRPTA, the Foreign Investment in Real Property Tax Act. Those rules provide for a 10% of the purchase price withholding at the time of sale, which is sent to the IRS as security for the payment of capital gains tax on the sale. If there is no gain, there is no tax. In many cases, there is an exception to that procedure, but a tax is still payable on any gain. On any such sale, a tax return must be filed for the year of the sale, whether there is a gain or not. The other form of ownership is one in which the owner is a shareholder in the ownership of the park, usually through ownership of a share in the corporation which owns the land. In that event, if a sale is made, the sale is of the share, the unit itself and the transfer of the lease between the owner and the corporation for the land under the unit. Again, if a capital gain is realized, there is tax payable on that gain, but there is no withholding as in a real estate transaction. Again, a tax return should be filed for the year of the sale. In both situations, of course, there are state fees on the transfer of the ownership of the mobile home unit.