Posted February 8th, 2016 at 6:01 amNo Comments Yet
Tax Breaks Would Favor New Factory-Built Homes Over Rebuilding Old Ones
“Just because someone has a lot of money doesn’t mean they’re not frugal.” –
Jess Maxcy, president of the California Manufactured Home Institute
LAKELAND, Fla. — When the divorce was finalized this week, retired hockey player Mike Comrie got the Bentley and the Mercedes, while ex-wife Hilary Duff got the “trailer” in Malibu.
So who got the better deal?
No doubt the so-called “trailer” trumps both luxury cars — and then some — when it’s located in Paradise Cove, a beachfront community where what one real estate agent dubbed “the world’s nicest mobile home” was listed for a record-setting $4 million.
Stevie Nicks snapped that one up before it even hit the MLS.
There’s a reason these celebs flock to places like Paradise Cove — beyond the spectacular ocean views and the opportunity to commune with the equally rich and famous.
For one thing, most of the homes in these parks have been rebuilt to such an extent that they are indistinguishable from the neighborhood’s traditional beach houses, which can sell for over 10 times more.
For another, lot leases are rent-controlled and there is no property tax: The tricked out pre-1980 models qualify for a simple vehicle registration fee, the same as Comrie’s Bentley.
But that may change, thanks to legislation making its way through the California Assembly, which would require future re-builds to be taxed as property.
If that happens, new owners will be less inclined to drop a couple of million on an older model and a couple of million more into a rebuild.
Not when they can move it out and replace it with a custom manufactured mansion, straight from the factory, with all the bells and whistles for a fraction of the cost.
Even if the law is not changed, permits for complete rebuilds are no longer being issued in California.
Having lost that tax advantage, new buyers may turn to high-end manufacturers that offer the same crown molding, Carrara marble, hardwood floors, and other fine details found in the rebuilds — for quarters, if not pennies, on the dollar.
In Malibu, the parks, themselves, will continue to be a fabulous deal for the frugal millionaire.
“In general, these places require minimal maintenance, your water is included and you won’t need to worry about an $80,000 septic system that most homes have in Malibu,” wrote agent Mike Gardner in his real estate blog. “A $4 million (traditional) beach house on Malibu Road will easily run $60,000 to $80,000 a year in taxes and maintenance and another $100,000 to $300,000 if your septic needs replacing.”
Award-winning consumer reporter Jan Hollingsworth explores all of these issues in Lifestyles of the Rich and Frugal: Manufactured Mansions Take Their Place in the California Sun, linked here: