On July 23, 2013, Governor Pat McCrory signed into law major changes to the North Carolina tax system that will directly impact the manufactured and modular home industry, as well as its customers!
In effect, the new law states that, beginning on January 1, 2014, the sales tax rate for both HUD Code AND Modular homes will change to 4.75%. There is currently no change in how the taxes are collected; the new law only changes the sales tax rate. An explanation of how this new tax rate affects HUD and Modular homes is described below:
The North Carolina Manufactured Home Association fought very hard against this legislation. Members met with leaders of the House, Senate and Governor's office on many occasions trying to influence their position. In the end, legislative leaders and the Governor wanted comprehensive tax reform and felt this legislation was best for North Carolina.
However, the fight is not over. They were able to get language put in the "study portion" of the bill requiring the Legislative Revenue Laws Committee to look at this new law, how it affects the manufactured and modular home industry, and determine if/what changes are needed. The NCMHA Executive Committee will work with this legislative study committee this fall and winter and advocate for changes.
What this means to you as a new home buyer....
Currently, when a customer purchases a manufactured home, a sales tax of 2% or $300 per floor is collected. (For new modular homes, the current rate is 2.5%) Under the new law, a tax of 4.75% will be collected on new manufactured AND modular homes, significantly increasing the consumer's total cost, and possibly affecting financing and appraisal values. For example, a $100,000 manufactured home would currently incur a tax of $600; but at the new rate of 4.75%, the tax would be $4750! This huge increase could significantly impact the affordability of a new home for many new home buyers!
This sales tax increase, along with rising interest rates makes it the perfect time for you to buy that dream home you've put off for so long! Call or visit Frank's Home Place today to avoid the fast approaching and costly changes coming that may affect your ability to buy a new home!