18 October 1990 Income Tax Severed Letter 902569A F - CCA for Mobile Homes

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

October 18, 1990

Dear Sirs:

Re:  Capital Cost Allowances for Mobile Homes

This is in reply to your letter of September 11, 1990, requesting a technical interpretation regarding the appropriate classification of mobile homes for capital cost allowance purposes. The mobile homes of concern are of steel framed construction, affixed in a particular location, but retain their capability to be moved to other locations as necessary. You are unclear as to whether the mobile homes could qualify as a "trailers" as that word is used in Class 10(e) of Schedule II of the Income Tax Regulations (the "Regulations").

Our Comments

A mobile home is designed to be a home and most mobile homes are probably used as reasonably permanent housing. Mobile homes are not trailers nor recreational vehicles. They are basically moveable or portable for purposes of providing "instant" housing, not for towing or touring around the country- side. In our view a mobile home is a structure or building and in this respect the Department's position regarding portable shelters which is set out in paragraph 2 of IT-79R2 (Capital Cost Allowance-Buildings or Other Structures) is intended to include mobile homes.

We find it difficult to rely on the Dubreuil decision (78 DTC 1584) as a precedent. On page 1587, Chairman Cardin stated that "both parties to the appeal agree that the subject properties are structures or buildings...". On page 1589, he indicates that the subject properties do not come within Class 6, not because they are not buildings, but because they are steel framed and are not wooden framed. The inference is that he considered them buildings, otherwise there was no need to determine whether they were wooden framed or steel framed. He also comments on class 3 in a similar manner. In spite of the inference that he considers them buildings he comes to the conclusion that they should be included in Class 8.

Irrespective of the decision in the Dubreuil case, we are of the opinion (because mobile homes are buildings) that they should normally fall into class 1 or 3 of Schedule II of the Income Tax Regulations depending on the year of acquisition. Only in the very rare instance where a mobile home is acquired for use as a portable or mobile loaner on a short term basis or as a portable or mobile rental unit also on a short term basis, could it ever be considered to fall into class 8. Where this is the case the mobile home is being used more or less as a trailer-home rather than as a reasonably permanent home.

We trust our comments are of assistance.

Yours truly,

for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch