Are a mobile home park's entrance fee and lot rental, plus manufactured home set-up costs and accessories like skirting, decks, and awnings, subject to Utah sales tax?

Plain-English summary

An industry representative wrote in noting a lack of documented guidance on manufactured home retail tax issues and asked the Commission to address several linked questions: is a mobile home park's one-time entrance fee (which doesn't buy the lot, just the right to place the home there and covers existing land improvements like sprinklers and landscaping) part of the taxable sale price? What about cases where the purchase price bundled in up to three years of prepaid lot rental? And are set-up costs — skirting, leveling, foundation work, utility hookups, decks, steps, awnings — part of the taxable sale?

The baseline rule for the home itself. Before answering the specific questions, the Commission recapped how the sale of the manufactured home itself is taxed, distinguishing two seller roles:

• Seller installs the home (permanently anchored per state standards, connected to plumbing/electrical/utilities) → the seller is a real property contractor under Rule R865-19S-58 and owes sales tax on 55% of its own purchase price from the manufacturer (the 45% new-home exemption under § 59-12-104(37) covers the rest; used homes are 100% exempt either way).
• Seller just sells the home without installing it → the seller is a reseller of tangible personal property and must collect tax from the customer on 55% of the sales price instead, paying no tax itself on its purchase from the manufacturer.

Entrance fee and lot rental. Under § 59-12-102(29)(b), "tangible personal property" specifically excludes real estate or interests/improvements in real estate. Since the entrance fee described here isn't a delivery or installation charge but rather a charge for access to the real property lot and reimbursement of already-existing land improvements, it's not subject to sales tax — and the same goes for lot rental payments, whether paid monthly or prepaid up front. (A footnote clarifies this differs from an "admission" or "user fee," which would be taxable under § 59-12-103(1)(f) — the entrance fee here is access to a rental lot, not admission to the park as a venue.) Critically, these nontaxable charges must be separately stated from any taxable charge on the invoice, or the whole combined charge becomes taxable. The ruling gives a worked example: sell an uninstalled home for one price plus a separately stated entrance fee, and only 55% of the home price is taxed; lump everything into one invoice total, and 55% of the entire combined amount gets taxed instead.

Accessories. The tax treatment splits based on when and how an accessory gets attached:

• Items that arrive from the manufacturer as part of the home package (an awning, swamp cooler, furniture, appliances) share the home's own partial exemption treatment, whether the seller is acting as installing contractor or as a reseller.
• Items purchased and attached separately after the home leaves the factory — decks, steps, awnings installed later, skirting materials, carports, sheds, cement pads — are not eligible for the partial exemption and are taxed at 100% of their price, regardless of who sells or installs them. The legal reasoning: the exemption is defined around the "manufactured home" itself as a transportable factory-built housing unit (§§ 58-56-3(10)-(11), § 59-12-1002(14)), and items attached after delivery aren't part of that transportable unit.

Installation and set-up labor. Under Rule R865-19S-78(A)(2), separately stated labor to install personal property to real property is nontaxable — full stop, regardless of whether the property itself ends up becoming real property. So labor to level the home, dig the foundation, or hook up utilities is always nontaxable if separately stated, no matter which seller role applies. But labor to attach accessories (like skirting) follows a different, narrower rule: it's nontaxable only if the manufactured home has already become real property by the time the accessory is installed (making the accessory installation to real property too); if the home is still tangible personal property at that point, the accessory installation labor is taxable.

What this means for you

Manufactured home dealers and mobile home park operators

Structure your invoices to separately state: (1) the home price, (2) the entrance fee, (3) lot rental, (4) factory-included accessories, (5) separately purchased/installed accessories, and (6) installation labor. Lumping any of these together with a taxable item drags the whole combined charge into taxability.

Businesses selling accessories like skirting, decks, or awnings

Track exactly when each item is attached — before delivery (shares the home's partial exemption) versus after delivery (fully taxable at 100%) — and separately, whether the home has already become real property when accessory installation labor happens, since that governs whether the labor charge for that specific accessory is taxable.

Accountants advising manufactured home industry clients

This ruling supplements PLR 97-053's framework with much more granular guidance on entrance fees, lot rental, and the manufacturer-package-vs-separately-attached distinction for accessories — review both together for a complete picture of manufactured home sales tax treatment.

Common questions

Q: Is a mobile home park's entrance fee taxable?
A: No. It's treated as a charge for access to real property and reimbursement of existing land improvements, not part of the taxable home sale — as long as it's separately stated from any taxable charges.

Q: Is prepaid lot rental (e.g., three years paid up front) taxable?
A: No, whether prepaid or paid monthly, lot rental is a charge for access to real property and is not subject to sales tax.

Q: Are accessories like skirting, decks, or awnings covered by the manufactured home's partial exemption?
A: Only if they arrived from the manufacturer as part of the home package before delivery. Accessories purchased and attached separately after delivery are fully taxable at 100%.

Q: Is labor to level a manufactured home or hook up utilities taxable?
A: No, as long as it's separately stated on the invoice — this labor is nontaxable regardless of whether the home ultimately becomes real property.

Q: Does this ruling apply to my manufactured home sales or park operations?
A: Not automatically. This is a private letter ruling binding only on the Commission as to this taxpayer's specific facts. It can't be relied on as binding by anyone else, though it may carry weight if your facts closely match.

Citations and references

Statutes and rules:

• Utah Code Ann. § 59-12-104(37) (45% new manufactured home exemption; 100% used manufactured home exemption)
• Utah Code Ann. § 59-12-103(a), (1)(f) (retail sales taxation; admission/user fee taxability)
• Utah Code Ann. § 59-12-102(29)(b) (tangible personal property excludes real estate/improvements)
• Utah Code Ann. §§ 58-56-3(10), (11); § 59-12-1002(14) (definition of "manufactured home")
• Utah Admin. Rule R865-19S-58 (real property contractor status)
• Utah Admin. Rule R865-19S-78(A)(2) (nontaxable separately stated installation labor)

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original PDF: https://files.tax.utah.gov/tax/commission/ruling/00-036.pdf

Original ruling text

REQUEST LETTER

00-036

Response March 6, 2001

October 13, 2000

Dear Sir or Madam:

It has come to our attention through
discussion with TAXPAYER REP in your office that there is a lack of documented
rulings governing the treatment of tax issues concerning the manufactured homes
retail line of business. Accordingly,
we are writing to obtain an Advisory Opinion on the issue detailed below.

The retail sales price of a
manufactured home may include the cost of initial entrance fee to a mobile home
park where the home would be set. I
would like to clarify that the entrance fee does not purchase the lot where the
home is setup, it simply allows the customer to place the home at the allotted
location and pays for various land improvements such as sprinkler systems,
landscaping, etc already in place. The
customer then takes over the monthly cost of renting the space. Is the one-time park entrance fee considered
part of the taxable sale? Further,
there have been instances where the purchase price included up to three years
of rental payments. Are these rental costs considered to be part of the taxable
sale?

There are various costs to setup a
manufactured home. The sales price may
include the cost of skirting, leveling, foundation work, utility hookups, deck
and steps, awnings, etc. Are the costs
to setup the manufactured home considered part of the taxable sale?

Please
advise us on the sales tax treatment of these costs in your jurisdiction.

Sincerely,

NAME

RESPONSE LETTER

March 6, 2001

NAME

RE: Manufactured Homes Sales Tax Exemption

Dear
Mr. NAME,

You have requested an advisory opinion concerning manufactured home sales and the sales tax implications that arise from placing a manufactured home in a mobile home park. First, you inquire whether a mobile home park�s initial entrance fee and prepaid rental payments are considered part of the purchase price of a manufactured home for sales tax purposes. Second, you ask whether sales tax is applied on set-up fees and accessories charged in association with the sale of a manufactured home. Before answering your specific questions, it will be helpful to understand how sales tax is applied on the sale of a manufactured home itself.

Sales Tax on Manufactured Homes. When you sell and
install a manufactured home, you are considered a real property contractor
under Utah Admin. Rule R865-19S-58, if you permanently anchor the manufactured
home on real property in compliance with state installation standards and
permanently attach it to plumbing, electrical systems and other utilities. This is true without regard to the nature of
the foundation or slab that sits under the home or the owner of the underlying
real property. As a real property
contractor, you are liable for sales tax on your purchase price from the
manufacturer, unless an exemption exists. Consequently, your company�s sale of
the manufactured home and installation of it to real property would not be
taxable.

On the
other hand, when you sell a manufactured home without setting it up or installing
it to real property as described above, your are not a real property
contractor, but rather a seller of tangible personal property. Accordingly, you should collect sales tax on
the sale of the manufactured home to your customer. In this case, you would not pay sales tax to your supplier when
purchasing the home, as you have become a reseller of tangible personal
property.

A partial
exemption for new manufactured homes and a total exemption for used
manufactured homes are provided in Utah Code Ann. �59-12-104(37), which exempts
from taxation:

(a) 45% of the sales price of any new
manufactured home; and

(b) 100% of the sales price
of any used manufactured home.

As
a result, when you act as a real property contractor by selling and installing
a new manufactured home to the underlying realty, you are required to pay sales
tax on 55% of the price you pay the manufacturer or supplier. When you sell a new manufactured home
without installing it to the underlying realty, you should collect sales tax on
55% of the sales price you charge your customer. Whether you are acting as a real property contractor or seller of
tangible personal property, there is no sales tax due on the purchase or sale
of a used manufactured home.

Initial Entrance Fee and Prepaid Lot Rental.
Utah Code Ann. �59-12-103(a) imposes tax on retail sales of tangible personal
property. Utah Code Ann. Section
�59-12-102(29)(b) specifies that �tangible personal property� does not include
�real estate or any interest or improvements in real estate.� You state that the retail price of a
manufactured home may include charges associated with placing the home in a
mobile home park. One charge, invoiced
as an entrance fee, allows the customer to rent a lot in the park and the park
to recoup the costs of the real property improvements already in place, such as
sprinkling systems and landscaping.
From your description, we do not consider this particular charge to be
for delivery or installation. If this
is correct, the initial entrance fee is a charge for access to real property
and reimbursement of the real property improvements already in place and, as
such, is not subject to sales tax.[1] Similarly, any lot rental payments,
whether prepaid or not, are charges for access to the real property and are not
subject to taxation.

The
nontaxable entrance fee and lot rental charges must be separately stated from
any taxable charge, or all charges are subject to taxation. For example, assume you sell a new
manufactured home, without installing it to the underlying realty, for $$$$$. You also charge a $$$$$ entrance fee, which
allows the owner to place the manufactured home in a mobile home park. In this case, only 55% of the manufactured
home�s $$$$$ price is subject to taxation, as long as the $$$$$ entrance fee is
separately stated on the invoice.
However, if you invoice all charges as one lump sum of $$$$$, then tax
would apply to 55% of the total $$$$$ charge.

Accessory and Set-Up Costs. You also sell accessories and services to �set-up�
a manufactured home on the underlying realty.
The accessories include skirting materials, decks, steps, and
awnings. Set-up services include
leveling the home, providing foundation work, installing the skirting
materials, and hooking up the utilities. At issue is whether these items are
taxable as part of the sale price of the manufactured home.

Accessories
Sold as Part of the Real Property. As previously discussed, in a transaction
where you are considered a real property contractor, you are liable for sales
tax on 55% of the manufacturer�s sales price to you. For purposes of the exemption, a �manufactured home� is defined
as a �transportable factory built housing unit . . . .� See Utah Code Ann. ��58-56-3(10), (11);
59-12-1002(14). We consider all items
purchased from the manufacturer as part of the manufactured home �package� to
qualify for the exemption. For
instance, if the home comes to you from the manufacturer with awnings, a swamp
cooler, furniture and appliances, these items qualify for the partial
exemption.

Other
items that you purchase separately and install to the realty, such as decks,
steps, awnings, skirting materials, or cement for the pad are taxable to you at
100% of your purchase price. Your sale
and installation of these items to your customer would not be taxable.

Accessories
Sold as Tangible Personal Property. In a transaction in which you act as a
seller of tangible personal property (e.g., the purchaser arranges
installation), your customer is eligible for a 45% exemption from sales tax on
the your selling price for the home as it arrived from the manufacturer. The exemption also applies to amounts you
charge for �dealer add-ons,� items that are attached to and become an integral
part of the dwelling prior to its delivery. For example, an awning, if attached to the manufactured home
prior to delivery, would be the type of non-manufacturer item that would
qualify for the exemption. Here again,
as a reseller of tangible personal property, you would not pay any sales tax on
your purchase of these items from the manufacturer or supplier.

In
contrast, items such as skirting materials, carports, sheds, decks, and
concrete or wood steps are not typically part of a transportable factory
built housing unit because they are attached after delivery. In addition, awnings sold and installed
after the manufactured home is delivered are not part of the transportable
housing unit. Accordingly, these items
are not eligible for the exemption and must be taxed at 100% of their sales
price when they are sold as tangible personal property.

Installation
and Other Set-Up Services. Utah Admin. Rule R865-19S-78(A)(2) states
that �[s]eparately stated charges for labor to install personal property to
real property are not subject to tax, regardless of whether the personal
property becomes part of the real property.�
Labor to level a home on a lot, dig a foundation, or hook up the
utilities all involve installing a manufactured home to the underlying real
property. Accordingly, all of these
labor charges are nontaxable if itemized separately from taxable charges,
regardless of whether the manufactured home becomes part of the underlying
realty.

On the
other hand, the taxability of labor charges to install tangible personal
property, such as skirting, awnings, etc., to a manufactured home depends upon
whether the manufactured home has become part of the underlying realty. For example, skirting materials are
typically attached to the manufactured home and not to the underlying
realty. Accordingly, if the
manufactured home has become part of the underlying realty, the skirting
materials are installed to real property and the labor charge is
nontaxable. Nevertheless, if the sale
of the skirting materials is taxable, as discussed above, the nontaxable
installation charge must be stated separately or the entire charge is
taxable. In contrast, if you install
skirting materials to a manufactured home that has not yet become part of the
underlying realty, the skirting materials are attached to tangible personal
property, not real property, and the labor charge is taxable.

Please contact us if you have any
other questions.

For the Commission,

Marc B. Johnson

Commissioner

MBJ/KC

00-036

[1] The entrance fee is not considered an admission
or user fee that is taxable under Utah Code Ann. �59-12-103(1)(f). Admittance to a mobile home park is an
admission described in Section 103(1)(f).