Valuation of Manufactured Homes (Not on a Permanent Foundation)
For California Property Tax Purposes
A frequently asked question regarding Manufactured Homes (Mobile
Homes) assessment is why the Assessor appears to ignore sales
price when establishing assessed value. The methodology used
to appraise Mobile Homes, Modular Homes and Manufactured Homes
comes directly from the California Revenue and Taxation Code
as interpreted by the State Board of Equalization (BOE). The
Board establishes guidelines and parameters for assessors to
follow in order that an appraisal made by the Madera County Assessor's
Office will be consistent with those of the other 57 counties
in the state. Some pertinent rules and regulations set forth
by the Board are noted below.
The general basis of our valuation methodology can be found
in Revenue and Taxation Code Section 5803(b). Any changes in
the law concerning the appraisal of Manufactured Homes that you
would like to see should be addressed to your California Legislative
Representative and NOT to the County Assessor, as we have no
authority to do other than what the law specifies.
The following excerpts are taken from both a State Board of
Equalization's Letter to Assessors No. 93/35, dated July 7, 1993,
and from Revenue and Taxation Code.¹
Section 5803(b) of the Revenue and Taxation Code specifically
provides that the assessed value of a manufactured home located
on rented or leased land is not to include any increase or decrease
in value attributable to the particular site where the manufactured
home is located. Section 5803(b) reads:
"The Legislature finds and declares that, because owners
of manufactured homes subject to property taxation on
rented or leased land do not own the land on which the manufactured
home is located and are subject to having the manufactured home
removed upon termination of tenancy, 'full cash value'
for purposes of subdivision (a) does not include any value
attributable to the particular site where the manufactured home
is located on rented or leased land which would make the
sale price of the manufactured home at that location different
from its price at some other location on rented or leased land.
In determining the 'full cash value' of such a manufactured
home on rented or leased land, the assessor shall take into consideration,
among other relevant factors, sales prices² listed in recognized
value guides for manufactured homes, including, but not limited
to, the Kelley Blue Book Manufactured Housing Guide and the National
Automobile Dealer Association's Mobile Home Manufactured Housing
Appraisal Guide."
Among the general provisions governing interpretation of the
Revenue and Taxation Code is Section 16. This section provides
in part that "shall" means it is mandatory.
Letter to Assessors No. 93/35 goes on to state that, "The
effect of the site upon the sale price of a manufactured home
can be either positive or negative." Section 5803 (b) states
that the full cash value of a manufactured home excludes any
value attributable to the particular site. Thus, the
assessor must not include any 'add-on' value for positive site
influence in the assessment of the manufactured home."
Moreover, in situations where negative site values exist,
it is the site, not the manufactured home, that is entitled to
a reduction in value. Such negatively impacted sites cannot command
the same rental level as comparable sites that do not face the
same adverse consequences. As a result, the manufactured home
owners pay reduced rents for the negative sites, but they should
pay proportional taxes on the manufactured homes, per se, because
the homes perform as constructed without any decrease in value."
Letter to Assessors No. 93/35 also discusses the three traditional
approaches to valuation: Replacement Cost, Comparable Sales,
and the Income Approach. It concludes that:
"Clearly, of the approaches to value described above,
the replacement cost approach, using an indicator
from a recognized value guide plus the value of all manufactured
home accessories, buildings and structures (this includes items
such as skirting, awnings, cabanas, storage cabinets, porches,
flatwork, carports, garages, storage sheds, and landscaping,
etc.) best provides the assessor with a value free of site value.
Obviously, this approach is also best in ensuring compliance
with the legislative directive to consider the value indicated
by a recognized value guide."
In recognition of the mandatory requirements of Section 5803(b),
the Madera County Assessors Office uses the following cost guides
to arrive at a value conclusion:
State Board Of Equalization Assessor's Handbook Section 531.35
Kelley Blue Book Manufactured Housing Guide
Marshall & Swift Residential Cost Handbook for Manufactured
Housing.
We believe that the use of the above guidelines is the legally
correct method of determining the assessed value of Manufactured
Homes for property tax purposes.
¹ LTA 93/35 is available in its entirety at www.boe.ca.gov/proptaxes/pdf/93_35.pdf
² Note: These 'sale prices' are from Dealer Lots, and not
from sales in a Park.
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Madera County Assessor's Office
200 W. 4th Street
Madera, CA 93637
Telephone: (559) 675-7710
Fax: (559) 675-7654
Office Hours: 8:00 AM to 5:00 PM
Monday through Friday
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