Real property vs. personal property
For 1031 exchange purposes, only real property can be exchanged for like-kind real property. A manufactured home that remains titled as a vehicle — on its DMV certificate of title, still on its wheels — is personal property and does not qualify.
The distinction is state-law based. Each state has its own process for converting a manufactured home's title from personal property to real property, typically requiring that the home be permanently affixed to a foundation, the wheels and axles removed, and the title surrendered to the county recorder in exchange for a deed.
The affixation and titling test
To qualify as real property for a 1031, a manufactured home generally must: (1) be permanently affixed to a foundation (concrete, piers, or a permanent slab), (2) have its transportation equipment (wheels, axles, tongue) removed, and (3) be deeded as real property under the applicable state's manufactured housing conversion statute.
Treasury Reg. 1.1031(a)-3 defines real property based on state and local law. If the home meets the affixation and titling requirements in its state, it should qualify as real property exchangeable for other real property — a house, apartment building, or commercial property.
Practical steps
Before attempting a 1031 with a manufactured home, confirm the state law requirements and obtain evidence that the property is titled as real property (a recorded deed, county assessor classification as real property). Your Qualified Intermediary and title company will need this documentation.
Manufactured home parks present a related issue: the land often qualifies as real property, but individual homes on rented lots typically remain personal property. If you own the park and the homes, determine the status of each separately.
Frequently asked questions
Is a manufactured home on its own land eligible for 1031?
If it's permanently affixed, has been converted to real property title under state law, and you own both the home and the land, yes — it should qualify.
What if the home is on leased land?
You would be exchanging only the home and any lease interest. A leasehold with 30 or more years remaining can be like-kind real property, but the analysis is more complex.
Does the 27.5-year depreciation schedule apply?
Yes, if the home is a residential rental on a permanent foundation titled as real property. If it remains titled as personal property, different depreciation rules apply.
Sources
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.