Mobile Homes and Taxes: What to Know Before You Pay Uncle Sam
Property Taxes are one of the largest expenses that homeowners incur every year. Many owners do not understand how the tax is calculated, and instead pay expense begrudgingly. However, not understanding how your property’s true market value can have burdening ramifications. It is the most determining variable in calculating your tax bill, and for mobile home owners, can be extremely misleading.
Property assessments, used to determine a property’s appraised values, represent real estate’s market value – the price one could reasonably expect to receive if they chose to sell the property at today’s time. However, these assessments are only completed sporadically. Although local laws may vary, thorough inspections and property assessments only occur when properties change hands to appease a mortgage provider’s requirements during a sale.
To compensate for the lack of data, properties are informally reassessed every year by the local state government to calculate an “updated” value for one’s property to calculate a “fair” value of a property. These assessed values almost always inherently increase given the nature of traditional site-built homes. These types of structures almost always grow in value & appreciate over time as inflation occurs and land prices increase. However, for mobile homeowners, this steady annual increase in “value” is not always accurate and can many times be an undue assumption.
Although manufactured and mobile homes can, and do, increase in value like site-built structures, they are more likely to stagnate or decrease in value than these traditional structures. Mobile homes are more prone to damaged caused by their surroundings, and their values are largely dependent on the condition of their residing park and normal wear-and-tear.
Recently in Chester County, PA, a suburban county 25-miles West of Philadelphia, residents in one park on average were paying four times more than they should have on annual property taxes. The previously assessed value of the 177 homes pooled for the valuation was $6.5 million. After Local Legal Aid of Southeastern Pennsylvania and volunteers stepped in to help property owners repeal their Tax Assessments, the cumulative value of the same group of properties was only $1.9 million. One owner in particular was paying fourteen times more than she should have been on her property. Before the assessment, her property tax bill was $1,600. After the reassessment, it was only $114.
The County Commissioner has since given the initiative a $10,000 grant to help provide funding to ease the way manufactured and mobile home values are calculated and is hoping for change in the greater community.
For homes of all kinds, there is simply not one formula that is able to accurately predict the its fair market value. This formula only becomes increasingly complicated when additional variables enter the equation like normal interior wear-and-tear and external environmental damage. Before accepting a property tax increase, it is important to understand the fundamental property value behind the assessment before simply paying the bill because in many cases, the value could be extremely inaccurate.