How is sales/use tax handled when a mobile home park owner buys, installs, and resells manufactured homes located in the park?

Plain-English summary

The Illinois Department of Revenue was asked by a manufactured home dealer/mobile home park owner to confirm how sales and use tax applies when it buys new manufactured homes, installs them on lots within its mobile home community, and later sells or resells those homes to tenants. The Department's answer rests on one key legal fact: under the Manufactured Home Installation Act, "[m]obile homes and manufactured homes in mobile home parks must be assessed and taxed as chattel" — meaning personal property, not real estate — while homes outside mobile home parks are treated as real property. See 35 ILCS 517/5.

Because a manufactured home sitting in a mobile home park is chattel, the park owner's purchase of that home from the manufacturer, for the purpose of installing it in the park and later selling it to a tenant, qualifies as a tax-free purchase for resale. The Department describes placing the home in the park as the equivalent of putting it into the park owner's inventory. The park owner then owes sales tax on the first sale of that home to a purchaser, which must be reported and paid on Form ST-556 (Sales Tax Transaction Return), citing 35 ILCS 120/3. If that same home is later bought back and resold to another purchaser while it remains in the park, that subsequent sale must also be reported and paid on Form ST-556.

This letter expressly rescinds and replaces an earlier GIL, ST 24-0047-GIL, on the same topic. It is a General Information Letter (GIL) rather than a Private Letter Ruling (PLR): a GIL merely points the taxpayer to the relevant law and is not binding on the Department, whereas a PLR is binding as to the specific taxpayer and facts presented (2 Ill. Adm. Code 1200.110, 1200.120).

What this means for you

Mobile home park owners and manufactured home dealers

If you buy new manufactured homes from a manufacturer to install and sell within your own mobile home park, that purchase is exempt from tax as a purchase for resale — you are not paying use tax on your acquisition cost. Instead, you collect and remit tax on each sale to a purchaser (whether the first sale of a new home to a tenant, or a later resale of the same home after it's bought back), and every one of those sales is reported on Form ST-556. This differs from manufactured homes located outside a mobile home park, which are assessed and taxed as real property rather than chattel under 35 ILCS 517/5.

Accountants and tax professionals

Watch the reporting mechanics carefully: the resale exemption applies only to the dealer/park owner's purchase from the manufacturer, not to any sale to an end purchaser. Every sale of the home to a purchaser — first sale or any later resale while the home stays in the park — is a taxable transaction reported on Form ST-556 under 35 ILCS 120/3. Note also that this GIL supersedes ST 24-0047-GIL, so any advice or client files that relied on the prior letter should be updated to this version.

Common questions

Q: Do I owe tax when I buy a new manufactured home from the manufacturer to place in my mobile home park?
A: No. That purchase is a tax-free purchase for resale, since the home will be installed in the park and sold to a purchaser.

Q: Who pays tax on the first sale of the home to a tenant, and how is it reported?
A: The mobile home park owner reports and pays tax on that first sale using Form ST-556, Sales Tax Transaction Return.

Q: If I buy the home back from a tenant and resell it, do I owe tax again?
A: Yes. Each subsequent sale of the manufactured home by the park owner to another purchaser must also be reported and paid on Form ST-556.

Q: Why does it matter whether the home is "inside" or "outside" a mobile home park?
A: Under 35 ILCS 517/5, homes inside a mobile home park are assessed and taxed as chattel (personal property), which is what triggers this resale/Form ST-556 treatment. Homes outside a mobile home park are assessed and taxed as real property instead.

Q: Does this letter change prior Department guidance?
A: Yes. It expressly rescinds and replaces General Information Letter ST 24-0047-GIL on the same subject.

Citations and references

• 35 ILCS 517/5 (Manufactured Home Installation Act - chattel classification for homes in mobile home parks)
• 35 ILCS 120/3 (Retailers' Occupation Tax Act - reporting sales on Form ST-556)
• 2 Ill. Adm. Code 1200.110 (procedure for requesting a Private Letter Ruling)
• 2 Ill. Adm. Code 1200.120 (General Information Letters are non-binding)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2025.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2025/st25-0007-gil.pdf

Original ruling text

ST 25-0007-GIL

2/21/2025

MANUFACTURED HOMES

Mobile homes and manufactured homes in mobile home parks must be assessed
and taxed as chattel. See 35 ILCS 517/5. When a mobile home park owner purchases
a manufactured home from the manufacturer to be installed in the mobile home park
and sold to a purchaser, the purchase from the manufacturer is a tax-free purchase
for resale. The first sale by the mobile home park owner of the manufactured home
located in the mobile home park to a purchaser is reported and paid on Form ST-556,
Sales Tax Transaction Return. Each subsequent sale of the manufactured home by
the mobile home park owner to another purchaser must also be reported and paid
on Form ST-556. NOTE: This letter supersedes ST 24-0047-GIL. (This is a GIL.)

February 21, 2025
NAME1
COMPANY
EMAIL
Dear NAME1:
This letter is in response to your letter dated November 18, 2024, in which you
requested information. The Department issues two types of letter rulings. Private Letter
Rulings (“PLRs”) are issued by the Department in response to specific taxpayer inquiries
concerning the application of a tax statute or rule to a particular fact situation. A PLR is
binding on the Department, but only as to the taxpayer who is the subject of the request for
ruling and only to the extent the facts recited in the PLR are correct and complete. Persons
seeking PLRs must comply with the procedures for PLRs found in the Department’s
regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter
(“GIL”) is to direct taxpayers to Department regulations or other sources of information
regarding the topic about which they have inquired. A GIL is not a statement of Department
policy and is not binding on the Department. See 2 Ill. Adm. Code 1200.120. You may
access our website at https://tax.illinois.gov/ to review regulations, letter rulings and other
types of information relevant to your inquiry.
The nature of your inquiry and the information you have provided require that we
respond with a GIL. In your letter you have stated and made inquiry, in relevant part, as
follows:
[November 18, 2024 inquiry]
Attached is correspondence relating to clarification requested on sales/use
tax in the state of Illinois. I've copied my questions below:

COMPANY
Page 2
February 21, 2025
I want to recap and put into writing for our sales tax file a phone conversation
I had with NAME2 about sales and use tax liability for us as a manufactured
home dealer.
Both of the below scenarios are related to installed manufactured homes.
New Homes:
We, as the dealer, purchase a new manufactured home from a manufacturer.
We then install the home onto a lot within our mobile home community by
skirting, removing the hitch and axles, anchoring, and hooking up utilities.
When the installation is complete, we are subject to reporting and remitting
use tax on the ST1 at our purchase price of the manufactured home. When we
sell this home in our community to our first tenant, we do NOT charge sales
tax and report the sale on the ST556. This transaction is then considered
complete.
Used Homes:
Assume the tenant from the above new home sale example moves out of the
home we sold them. We buy the home back from them as it sits to resell (there
is no transportation of the home). When we resell the home, we charge the
new buyer sales tax and report the sale on the ST556.
Please confirm the above is accurate for record-keeping purposes.
Is this something you can help with?
[January 6, 2025 follow-up]
I'm getting push back on the GIL received on this topic and running into titling
issues with the IL Secretary of State. Essentially, what they are saying is that
because the homes are on our property (confirming my questions were
referencing sales within mobile home communities whereby we sell homes to
tenants that remain on our land while they pay lot rent), the homes need to be
treated as personal property and therefore taxable. As the dealer, they are
saying we must file form ST556 in order to transfer title to the new owner and
that the affidavit of affixation is not applicable in mobile home communities.
I've been receiving a lot of conflicting information on this topic and I'm hoping
we can get everything in line and move forward with selling homes.

COMPANY
Page 3
February 21, 2025
DEPARTMENT’S RESPONSE:
This letter is related to the sale by mobile home park owners of manufactured homes
located in mobile home parks only and rescinds and replaces General Information Letter ST
2024-47-GIL.
The Manufactured Home Installation Act provides that “[m]obile homes and
manufactured homes in mobile home parks must be assessed and taxed as chattel. Mobile
homes and manufactured homes outside of mobile home parks must be assessed and
taxed as real property.” See 35 ILCS 517/5. The Act provides that “mobile home” and
“manufactured home” mean the same thing for the purposes of the Act. The Act defines
“mobile home park” as a tract of land or 2 contiguous tracts of land that contain sites with
the necessary utilities for 5 or more mobile homes or manufactured homes.
This statutory designation of manufactured homes in mobile home parks as chattel
impacts the reporting and payment of tax by mobile home park owners when they sell
manufactured homes located in mobile home parks. When the mobile home park owner
purchases the manufactured home from the manufacturer to be installed in the mobile
home park and sold to a purchaser, the purchase from the manufacturer is a tax-free
purchase for resale. The placement of the manufactured home in the mobile home park by
the mobile home park owner is the equivalent of placing the manufactured home in the
mobile home park owner’s inventory. The first sale by the mobile home park owner of the
manufactured home located in the mobile home park to a purchaser is reported and paid on
Form ST-556, Sales Tax Transaction Return. See 35 ILCS 120/3. Each subsequent sale of
the manufactured home by the mobile home park owner to another purchaser must also be
reported and paid on Form ST-556.
I hope this information is helpful. If you require additional information, please visit
our website at https://tax.illinois.gov/ or contact the Department’s Taxpayer Information
Division at 800-732-8866.
Very truly yours,

Samuel J. Moore
Associate Counsel
SLM:slc