Property taxes can be a complex topic, as manufactured homes can have several different situations, depending on how your land is set up. These taxes are also a new cost to homeowners when compared to renting. At Clayton, we want you to feel confident and informed when you purchase a home, so here is what you need to know about property taxes, whether your new home is on property you are renting or own.

How are property taxes used?

In the U.S., property taxes are paid by property owners to local governments and are typically based on the value of the property that is owned. Money from property taxes is generally used to help fund things like community safety, education and infrastructure.

How are property taxes calculated?

Property taxes are calculated based on your property’s assessed value and the tax rate of the taxing authority, which is commonly evaluated by your local tax assessor’s office. The assessment of your property is based on the tax assessor’s estimation of the market value of your home.

Usually, the market value is determined by either a sales comparison, cost method or income method. However, you can check with your local tax assessor’s office to find out exactly how property taxes are assessed in your area.

Who pays property taxes?

Generally, if you own both the land your manufactured home is on and the home itself, you will pay all property taxes associated with your property. However, if you don’t own the land, who is responsible for the property tax can vary based on state and local laws.

What property taxes are paid on manufactured homes?

If your home will be located on land you own and it’s titled as real property, your chosen lender will likely offer or require an escrow account for the property taxes and home insurance. This means you will pay a portion of the property taxes each month into a that account and your lender then pays the property taxes from it when the taxes are due.

If you are placing your home on rented property, such as a lot within a manufactured home community or on land you are renting, the responsibility for the property taxes will vary depending on the state and county. If the home is not permanently attached to the land, your lender may still require an escrow account for the personal property tax on the home itself.

Some states may require the landowner to be responsible for the property tax, and in other states, it’s the homeowner who is responsible. In addition, the property tax amount is based on the value of the land and home together because the home is a part of the value of the land. However, some counties will separate the property tax into two separate bills, one for the land and a second for the home, which can be helpful in a situation where you’re only responsible for the home portion of the property tax. Contact your local taxing authority to see if they can tax your home separately from the real property of the land.

How do property taxes work if you don’t own the land?

If you’re renting land from a community or individual, the cost of the property taxes may be included in the property rent. In that case, the landowner will be responsible for paying the property tax to the taxing authority.

If the landowner is responsible for paying the taxes to the taxing authority and does not pay them, your home could be subject to a tax sale. Therefore, it’s a good idea to verify with the taxing authority that the property taxes have actually been paid.

The property tax may also still be required to be escrowed into your monthly mortgage payment, depending on the lender you choose to finance your manufactured home purchase. Some lenders may still require mortgage escrow payments to go toward the property tax and then issue a refund check to the homeowner after verifying the property owner has paid the property tax. Check with your chosen lender to find out what their policy is regarding escrows for property taxes.

Are there property tax exemptions available?

A property tax exemption can be a reduced percentage of your property tax bill or a full exemption from property taxes. Check with your local tax office or appraisal district about any tax exemptions you may qualify for, such as for being a senior or a military veteran. By checking for tax exemptions, you may find out that you qualify for a reduction of your property tax bill.

Being a homeowner has a lot of benefits, including some potential tax deductions! And to learn more about what to expect, you can check out our blog to explore the homes we offer, info about visiting a home center, our commitment to affordable choices and more!