4plexowner – Can you give a response, with the actual scenario I described. First, financing on mobile homes is more like a car, thus at a higher interest rate and shorter term. I was told 15 years max, 12% interest.
It would be a primary residence, so no investor considerations.
My friend says the land is basically rent-controlled, and is $600/month. It can be increased monthly, but in small increments. He figures as the value of land increases, the limits in lease increases make the mobile home even more valuable, as you have the right to live on that land at the old rate. Is the limit of lease increases individual to the park? Does it change at time of sale? I wonder how your friend’s lease went up 4x.
About your calculations: yes, he would pay $12K/year in interest (12%, 15 yr fixed, 25% down on a $125K mobile home), but he pays double that in rent. So how is he down $4550? Besides, once he exceeds the standard deduction, he can deduct medical and professional expenses and charitable contributions.
I’m just trying to help him figure out if this would be worthwhile. He believes housing prices will go down 30% – 50%, and is bearish on the dollar. He’s a real sharp guy, and trying to find a way to keep from paying almost half his money to taxes. The CPA had no ideas for him. It seems buying a house could be the biggest help, but I figure unless he has a $1mil mortgage, with a $60K/yr interest expense, the interest deduction will barely make a dent in the taxes anyway. What to do?
