1031 Exchange Mobile Home to SFR

[Grace Park]

Hello everyone!

I currently live in the SF Bay Area, and we bought a manufactured home in a mobile home community here in Sunnyvale, CA. To be clear, we own the home but rent the land. Mobile homes in any other part of the country typically depreciate, but due to the anomaly of the Bay Area real estate, our mobile home has appreciated. In fact, the real estate agent we bought the home from stated we could now list our home for $50k over what we bought it for. 

I was wondering - are we able to do a 1031 exchange for mobile homes? I'm hoping to sell this mobile home and purchase an investment single family home. I'm really hoping to be able to defer the taxes on our capital gain when we end up selling it. 

If you have any insight, I'd greatly appreciate it. We're looking to possibly use this as our first step into our real estate investing journey. Hope to hear back from everyone. 

Thank you!

[Dave Foster]

@Tonya Toomey, If the house has already closed I'm going to assume that a 1031 has begun and your client is using a QI correct?  If not then the 1031 is a no go from the get go because it requires that a qualified intermediary be in place prior to closing of the sale.  

But assuming that they've started a 1031 then the answer is that as long as the mobile home park includes the land under the trailers then it is "like kind".  Like kind refers to the use as investment.  Any type of real estate used for investment is like kind for any other kind of investment real estate.  So from that perspective they're good to do.

where a mobile home is not like kind is when it's not real estate.  A mobile home on rented land is not real estate.  You can tell the difference very quickly.  If theres a property tax bill from the county appraiser it's real estate.  If there s a renewal notice from the DMV it's not real estate.