Depreciation rate set by mobile home's useQ: I recently...

REAL ESTATE Q & A

January 24, 1993

Depreciation rate set by mobile home's use

Q: I recently purchased a single-family mobile home that I intend to use as a rental. At what rate may I depreciate the home? Does it qualify as a vehicle, or do I treat it as a piece of real estate?

A: A mobile home used as a residential rental must be depreciated over the 27.5-year schedule used for real estate.

The reason a mobile home used as a rental does not qualify for the seven-year depreciation schedule afforded vehicles has nothing to do with whether it is a vehicle or a piece of real estate. The issue here is simply that the mobile home is being used as a residential rental and is entitled to the same depreciation rate as other residential rentals.

Century 21 to decentralize, reorganize

Q: Is it true that the country's largest broker franchise group, Century 21, is breaking its organization into small regional units?

A: Century 21 Real Estate Corp. plans to decentralize its management functions and reorganize its domestic operations into a greater number of regional units. But the operation will continue to be administered from its headquarters in California.

"The move flies in the face of the consolidation, downsizing and retrenching trend that is happening throughout the industry," said Richard Loughlin, Century 21 president. The new Century 21 structure will make training, franchise sales, marketing and broker support the key focus of each region, he said, and "free many of our staff members of administrative and accounting duties."

Century 21 is a wholly owned subsidiary of Metropolitan Life Insurance Co. It includes about 6,500 franchised offices in nine countries.

Adjustable-rate mortgages are largest

Q. Do fixed-rate home mortgage loans tend to be larger than adjustable loans?

A. No. The conventional adjustable-rate mortgage typically carries the largest average loan balance, at $132,885. Loans insured by the Federal Housing Administration have the smallest average loan balance, at $64,442.

The overall average home mortgage loan balance is $112,065, according to a report from Better Homes and Gardens Real Estate Service, a national real estate brokerage franchise network.

Interest is deductible on boat used as home

Q: I have a home and a 40-foot boat on which I pay property taxes. Why can't I deduct the property taxes for my boat on my income tax filing? I spend weekends on the boat. Wouldn't this qualify it as a vacation home?

A: Regardless of whether you spend every weekend on your boat or no weekends there, any property taxes you pay to berth the vessel are a legitimate income tax deduction as real property taxes.

The other, more pertinent, question would seem to be whether you are able to deduct any interest you are paying on a boat purchase loan as second-home mortgage interest. The answer to that is "yes," so long as the boat can legitimately be used as a home. The most practical test, say our experts, is whether the boat has the necessary toilet facilities.

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