Mobile Home Depreciation Rates
When it comes to a mobile home, it is important to understand that it will not appreciate in value like properly built home. This is true even if you do not move your mobile home again. Also, when it comes to a mobile home, any financing that you seek or insurance, it will be given similar to that given to motor vehicles.
Where mobile home depreciation is concerned, it is important to know that the value of the house may depreciate unlike a home that is built on the site. However, this is not always true. In case a person owns the land on which the mobile home is located and the land is situated in a desirable location or neighborhood, then it is not necessary that the mobile home will depreciate.
If you are wondering what mobile home depreciation rates are, you will be disappointed to learn that it is not fixed. There are many factors that actually determine how the value of mobile homes depreciates. The biggest factor that determines the depreciation rate of mobile homes is the zoning restriction in an area. In most metropolitan cities, there are restrictions as to where mobile homes can be placed. While in rural and suburban areas there is just limited space available to put mobile homes.
Many people even today look down on mobile homes and they do not want them anywhere near their homes as they fear these homes will bring down the value of homes in the neighborhood. Also, banks still look at these homes like they would look at motor vehicles and do not value it like traditional homes. Hence, this affects the insurance and financing on mobile homes and makes it more difficult to get one.
When calculating mobile home depreciation rates, one has to use one of the 2 methods of calculating depreciation. One method is known as depreciation method that reduces the sale price of the mobile home to eighty percent of a fully furnished home, or ninety-five percent of a home that is not furnished. Then a five percent depreciation allowance is taken into consideration for each year and this is applied to the sale price. This method is usually used to calculate depreciation of mobile homes that were purchased before 1 January 2000.
The second method is the appraisal method and it has to be used for homes that were bought after 1 January 2000. Here a tax similar to property tax has to be paid and thereafter every 3 years, the value of the mobile home is adjusted based estimated market value.
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