Is a court-ordered sheriff's sale of used manufactured (mobile) homes subject to Kansas sales tax?

Plain-English summary

Two manufactured (mobile) homes originally bought from a dealer in September 1999 for $160,000 (a price that included site preparation and installation) were later sold under a court order at a sheriff's sale. The question was whether that court-ordered sale was subject to Kansas sales tax. The Department said no — because the homes were used, the sales are exempt, and any tax collected should be refunded.

How Kansas taxes manufactured homes. New manufactured homes are taxed as sales of tangible personal property, but K.S.A. 79-3606(ff) exempts 40% of the selling price, so only 60% is taxed — a rough substitute for the labor-services exemption that applies when a conventional "stick-built" home is constructed.

Used homes get an outright exemption. To treat used stick-built homes and used manufactured homes alike, K.S.A. 79-3606(bb) provides an outright exemption for sales of used mobile or manufactured homes. This reflects that sales tax does not apply to real-estate sales, which include sales of homes.

The exemption applies regardless of who sells — including a sheriff. The Department found the two homes qualified as "used" manufactured homes, so their sale is exempt whether or not the homes are affixed to real property. And although sheriff sales of tangible personal property are normally taxable (because such sales recur), used mobile homes are exempted by statute regardless of who makes the sale — which includes a sale by a sheriff. The Department concluded any tax collected on these sales should be refunded to the purchasers who bought the homes at the sheriff's sale.

Bottom line: a used manufactured or mobile home is exempt from Kansas sales tax under 79-3606(bb) no matter who sells it, so a court-ordered sheriff's sale of used homes is not taxable.

What this means for you

Buyers and sellers of used manufactured/mobile homes

Sales of used mobile or manufactured homes are outright exempt under 79-3606(bb), whether or not the home is affixed to real property. If you were charged sales tax on a used-home purchase, this ruling indicates the tax was collected in error and should be refunded.

Sheriffs, courts, and forced-sale purchasers

Even though sheriff sales of tangible personal property are ordinarily taxable, the used-mobile-home exemption applies regardless of who makes the sale. A court-ordered or sheriff's sale of a used manufactured home is not subject to Kansas sales tax.

New vs. used is the dividing line

A new manufactured home is taxed on 60% of its selling price (40% exempt under 79-3606(ff)); a used manufactured or mobile home is fully exempt (79-3606(bb)). Confirm the home's status before charging or paying tax.

Common questions

Q: Is a court-ordered sheriff's sale of a used mobile home taxable in Kansas?
A: No. Used mobile and manufactured homes are exempt under 79-3606(bb) regardless of who makes the sale, so a sheriff's sale of used homes is not taxable.

Q: What if sales tax was already collected on the sale?
A: The Department said any tax collected on these sales should be refunded to the purchasers who acquired the homes at the sheriff's sale.

Q: How is a new manufactured home taxed?
A: A new manufactured home is taxed as tangible personal property, but 79-3606(ff) exempts 40% of the selling price, so tax applies to 60% of the price.

Citations and references

• K.S.A. 79-3606(bb) — provides an outright exemption for sales of used mobile or manufactured homes, whether or not affixed to real property and regardless of who makes the sale.
• K.S.A. 79-3606(ff) — exempts 40% of the selling price of a new manufactured home, so 60% is taxed.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2001-084

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

August 8, 2001

XXXX
XXXX
XXXX

RE: Your fax of August 3, 2001

Dear XXXX:

Thank you for your recent fax. You ask if the court-ordered sale of two manufactured (mobile) homes is subject to sales tax. The two homes were originally purchased from a dealer in September, 1999 for $160,000. The purchase price included site preparation work and installation of the homes.

Sales of new manufactured homes are taxed as sales of tangible personal property. However, K.S.A. 79-3606(ff) provides an exemption to the extent of 40% of the selling price. This has the effect of taxing 60% of the selling price for a new manufactured home. This roughly approximates the exemption of labor services that Kansas statutes extend for labor service charges for constructing a stick-built home.

To provide similar treatment for stick-built used homes and used manufactured homes, K.S.A. 79-3606(bb) provides an outright exemption for sales of used mobile or manufactured homes. This provision recognizes that sales tax does not apply to real estate sales, which include the sales of homes.

Given your description of the transactions in question, it appears that the sales of the two homes qualify as sales of “used” manufactured homes. Accordingly, there is a specific exemption for these sales, whether or not they are affixed to real property. While sheriff sales of tangible personal property are normally taxable because such sales are recurring in nature, sales of used mobile homes are exempted by statute regardless of who makes the sale. This would include the sale by a sheriff. Accordingly, I believe that any tax collected on these sales should be refunded to the purchasers who acquired the homes at the sheriff’s sale.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Date Composed: 08/09/2001 Date Modified: 10/11/2001

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