Methods of Taxation

The law allows for different methods of taxation.

Depreciation Method

Owners who purchased Manufactured/Mobile Homes prior to January 1, 2000, are taxed using a method of depreciation and the full tax rate. This tax rate is not subject to H.B. 920 reduction factors. This method uses the sale price of the Manufactured or Mobile Home which is multiplied by either 95% for unfurnished or 80% if the home is furnished. This amount is known as the depreciated value which is multiplied by 40% to create the assessed value. The assessed value is multiplied by the full tax rate to calculate the yearly taxes. 

Every year an additional 5% depreciation is deducted from the 95% or 80% until it reaches a minimum of 50% for unfurnished or 35% for furnished manufactured or mobile homes (see example). Manufactured or Mobile Home Owners whose home has been purchased prior to January 1, 2000 can stay on this method or elect to change to the new method known as the Appraised Method.

Appraised Method

All Manufactured or Mobile Homes that are purchased or otherwise transferred after January 1, 2000 or elect to convert to this method will be taxed like Real Property. Under the Appraised Method all homes will be appraised for Market Value by the County Auditor, similar to the way Real Property is valued. These values will be adjusted every 3 years on the same schedule as Real Property. 

This method will use the appraised value multiplied times 35% assessment factor to create the assessed value. The assessed value will be multiplied by the effective tax rate to calculate the gross tax. This method is also entitled to the 10% rollback and 2½% owner occupied credit, same as Real Property owners. To calculate the net taxes, the 10% Rollback and 2 1/2% owner occupied credit (if applicable) are deducted to create the net taxes for the year (see example).

Examples

To further illustrate the difference in these two methods, please refer to the following examples for Manufactured or Mobile Homes purchased in 1999 and 1993:

Taxes Using the Depreciation Method

*Current Tax Rate
Factor
 1999
 1993
Purchased Price
 $56,421
$35,150
Depreciation % x
80%
 50%
Depreciated Value
 $45,140
$17,575
Assessment % x
 40%
 40%
Assessed Value
 $18,056
$7,030
*Full Tax Rate x
 79.75
 79.75
2000 Full Year Tax
 $1,439.97
$560.94

Taxes Using Appraised Method

*Current Tax Rate
Factor
 1999
 1993
Appraised Value
 $56,421
$39,300
Assessment % x
35%
 35%
Appraised Value
 $19,750
$13,760
*Effective Tax Rate
48.363115
 48.363115
Subtotal
 $955.17
$665.48
10% Rollback
 $95.52
$66.55
2 ½ % Credit
 $23.88
$16.64
2000 Full Year Tax
 $835.78
$582.29

The example shows two different situations in the case of a home acquired in 1999. It would be beneficial to convert to the Appraised Taxation Method for this example. In the second example where a home was acquired in 1993, it would be beneficial to continue on the Depreciation Method. Our office would be pleased to provide you with a tax analysis based upon your situation.

Converting Your Manufactured or Mobile Home to the Appraised Method

If you have determined that it would be beneficial to convert to the new Appraised Method, please contact our office prior to December 1st of any year. To convert to the new Appraised Method, all taxes must be paid and a DTE Form 55 is required to be filed with our office. This form is available at our office. Please note that you can only change methods once.

Converting Your Home to Real Estate

The new law allows for homeowners who own the land where their home is located to convert the home to Real Estate. To do so the home must be affixed on a permanent foundation, all taxes must be paid and the title surrendered to the Auditor’s Office.