Wednesday, January 8, 2014

Modular Home Builders Penalized in North Carolina

On New Year's Day, a new tax law went into effect that could have far reaching problems if other states find that they can make more money on taxing modular homes sold into their states.

In the past, modular homes in NC were taxed at a rate of 2.75 of the total cost which assumed that the tax was only for the material costs and collected by the modular home factory before it was shipped. Now it appears things have changed.

On January 1, NC is charging a 7.25% on the total cost of the modular home. That could add up to $2,000 to the cost the home owner pays. Site built home builders pay the same 7.25% BUT it's only on the actual materials used in the new home.

I talked with a factory rep (off the record) that supplies homes to NC and was told that legislature considers a finished module to be a component and therefore completely taxable.

If a new modular home and a site built home were to be built for the exact same price for the new home buyer, the modular could cost up to several thousand more dollars just because the way the tax is calculated.

I've read the info about this new tax several times and it appears that modular housing is getting the shaft in NC.

If anyone knows the details of this new law and would like to share their experience or correct my assumption, please let me know.

1 comment:

Anonymous said...

I believe the percentage you have is incorrect, it was increased to 4.75%.