Property Taxes

Started by JoyceS1 • 17 replies • 2173 views

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JoyceS1 (Indiana)
Posts: 140

Posted:

Recently, our state performed a reassessment. Properties are now assessed on the basis of market value as opposed to the previous criteria.

Our HOA's common area had been taxed separtely and our budget provided for payment of common area property taxes. Now, the state has taken upon itself assigning each homeowner a portion of the value of the Common Area as part of their individual property tax.

I'm troubled by this. Does anyone else find this new way of paying property taxes on common areas troubling besides me?

BrianB (California)
Posts: 2,820

Posted:

how weird. what will the state do if someone refuses to pay for their 1/250th or so of the common area? repossess it and sell at auction? I can see this going bad, very fast. In fact, were i to live there, i might not pay JUST to force the state to foreclose on that piece of property.

LindaC3 (Florida)
Posts: 526

Posted:

Whate state are you in ???LindaC

JoyceS1 (Indiana)
Posts: 140

Posted:

LindaC

Indiana.

If you are from Indiana and know more about this situation than what I have presented, please share.

Thanks.

Joyce

PatrickH (California)
Posts: 204

Posted:

Hi Joyce,

I don't know the laws in your state, but most HOAs are non profit corporations and file for an exemption from property taxes on their common area. The individual owners pay taxes on their property, but the common area is exempt.

Check with your county Assessors Office to see about non profit organizations being exempt from property taxes. It usually applies to privately owned schools, hospitals, churches, etc., so if they receive them in your state, your HOA should be able to file the same property tax exemption claim that they do.

BrianB (California)
Posts: 2,820

Posted:

Patrick, those exemptions usually apply to charitable organizations, which are 501(3)C organizations under the not for profit corporation status. HOA's are rarely eligible for such a status, and in my experience, almost always pay property taxes, etc., just like the American Legion, VFW, Shriner's, etc.

RogerB (Colorado)
Posts: 5,067

Posted:

All HOAs we manage have had their common area land exempt from taxes.

BrianB (California)
Posts: 2,820

Posted:

Wow Roger, that's a very nice bonus! Granted, for us that would save about $50 a year, but i can see that it would be very nice for those HOA's with golf courses, club houses, swimming pools, etc.. The property taxes on those could run to the thousands!
How do you manage it? Just ask for an exemption, file papers, or what process must an HOA go through?

CathyH2 (Indiana)
Posts: 10

Posted:

I am from IN too and have not heard this change in regard to common areas. Are you saying that each homeowner will now see the portion of common area tax they owe listed on their property parcel's tax statement? When did this change go into effect regarding how common areas are taxed?

I know in our community, the common area taxes are paid with the monthly assessment monies as budgeted (and as billed by the assessor). As a homeowner, I am then advised by my HOA the amt of my individual portion paid for those taxes .

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Is it possible this new method of collecting taxes has to do with The Storm Water Managment act? If your state is starting to levy this tax they may well levy it to the individual unattached single family homes. Just a guess. It is calculated by the footprint of the dwelling, driveways, etc, and how this run off is handled.
Just a guess.

JoyceS1 (Indiana)
Posts: 140

Posted:

CathyH

According to the Indiana Department of Local Government Finance:

In 2003, our common area taxes went from $1500 a year to $200. The rationale was that the common area could not be sold and developed, thus had reduced value.

I'm getting conflicting information from our Assessor's office. One person says that the common area is no longer taxed at all (which I hope is the case), while another claims that it's value was distributed among all the homeowners.

I have been unsuccessful thus far in finding out definitively what is going on. Perhaps I'm looking in the wrong places.

Nevertheless, if it indeed is distributed as one has indicated, then the chances of losing an interest in a portion of the common area is a possibility, as someone mentioned, due to the possibility of someone not paying their taxes.

If you have a better handle on this than I do, please share.

Thanks.

Joyce

CathyH2 (Indiana)
Posts: 10

Posted:

Hi Joyce.

I was very much aware of how the State had changed the methods used to determine property values for taxation purposes. I work with mortgage companies and we see the effects of this change all too well.

I am wondering if how that tax for the common area is distributed in an HOA is determined at the County level...the only change I am aware of on the State level is the method I descirbed above which is a nighmare in and of itself for many homeowners due the problems assessors had in just getting the new methods put into place. Some counties had two or three years of taxes all assessed in one taxing period due to the delays.

For us in Marion County, the only change has been in the amt of taxes assessed but I have not seen a change in any other way with our HOA.

PatrickH (California)
Posts: 204

Posted:

Hi Brian,

My HOA is California and we have never paid a property tax bill on our common area in 20 years.

One reason may be that in California, when you purchase a home, the assessed value is the sale price. Therefore, the "value" of the common area is reflected in what someone paid for their home. My HOA has a large recreation center and a lot of greenbelts, so homes in my HOA sell for about $ 15,000 more than similar homes nearby that don't have a recreation center. We end up being "taxed" for our recreation center and common area by the higher assessed values of our homes.

For you folks in states where the Assessor is moving towards a "market value" assessment and is also taxing your common area, you're being taxed twice. The "market value" of your homes already reflects any added value from your common areas, so you shouldn't be paying taxes again on the common areas.

JoyceS1 (Indiana)
Posts: 140

Posted:

CathyH

Oh, my....I bet you have seen the impact of this move toward market value through your work. It has been an enormous change for some homeowners.

Unfortunately, I haven't kept up on what is going on with property taxes, until this situation. I wasn't aware that counties were playing catch-up in various ways.

Thanks for your insight, Cathy. Since I was told it was State dictated, it gives me another perspective. I will continue to pursue this at the county level until I can rest my concerns.

Joyce

ElizabethC3 (Indiana)
Posts: 21

Posted:

I am in Indiana. Our assessor and our community director has explained that the township taxes us individually for the common area based on the percentage basis, according to our unit's square footage.. Our association does not pay a separate bill for the common area. On the same note, I wrote a letter to our City Council person last week. I explained that our property taxes are the highest in the township and we do not receive trash pickup service. I asked him to research Municipality Laws and convince the council to agree that the city should either lower our taxes or reimburse our association for this expense. We are caught in the "Double Tax" situation. This expense to our association is over $11,000 a year. The developer turned over the regime four years ago, the building was previously an apartment building and he converted them condos. The apartment building owners naturally paid for the private pickup service since it was considered a businesss, we were now homeowners. At each annual meeting I would bring this fact up and suggested that the Board should form a committee to research tax breaks for us or contact a lawyer that knew Municipality Law. Our Board would just blow me off and not look into the matter. Well, getting back to my letter, our Council person called me immediately and said I was absolutely right to complain and he would bring it up at the next council meeting and seek some sort of relief--no instant guarantees--but something will eventually come our way to pay for our sanitation needs. My complaint is that our ineffective, lazy BOD and office manager did not address the "double tax" situation and try to seek relief for the dues paying members. This oversight has cost us over $40,000 and it makes me sick. They don't even know I wrote the letter, so I got a council person wanting to help us out and they don't even have a committee in place to negotiate with the city fathers. Where should I go from here? I don't really want to turn the matter over to them, I'm afraid they will bungle it. Can I sue them for their stupidity?

ElizabethC3 (Indiana)
Posts: 21

Posted:

I am interested in how to challenge the assessors office with taxing us on our percentage of the common area. I pay $2,540 a year for a 1,200 square foot condo and that includes the 100 sq. foot balcony, so basically I live in an 1100 sq. foot small home. I moved here from another state, live on a retirement fixed income and was shocked when I received my first property tax bill. It was not disclosed at the time of sale because it was an apartment conversion to condos. The apartment building owner had a tax abatement until it completely converted so the property taxes were not an issue for him and not listed on the closing statement. Taxes are paid in arrears- 2005 taxes are paid in 2006--another confusing and odd practice in the Hoosier state. I have been mad at the state of Indiana since I moved here, I feel like I got duped and am looking for a way to cross the river and go back to where I came from. Indiana also makes it cheaper to rent than own a home, a renter gets a tax break on their income taxes and the owner of the rental property does not get the Homestead exemption. I don't see how people make it anymore, we are taxed to death. I know now why I see so many elderly people working at Walmart and McDonald's, they have to work somewhere to save their homes from tax foreclosures even though their mortgage is paid for. What a shame or a scam for the wolves to get property cheap. I would think politicians would have more of a concience than that but they are usually one ones buying up the goodies at the Sheriff's sale.

CathyH2 (Indiana)
Posts: 10

Posted:

Elizabeth,

Contact your township assessor's office or the county assessor. They should have forms you can use to challenge the propery assessment or they can at least explain the process they have in place where you live.

There are bills in this legislative session that address the property tax issues here in IN. I agree it is a mess and has caused undue hardship on thousands of Hoosiers. Our politicians did a very bad job with the changes they made to the laws regarding property taxes. I am afraid it is going to take quite some time to get this mess straightened out.

Go to www.IN.gov to find the names of your legislators and let them know what you think.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Cathy and Elizebeth,

For what it is worth. Lots of states have been reassessing property values by law. This requires all property be reassessed, this creates a shortage of assesssors. When this happened here we were given the opportunity to appeal and schedule an appointment with an assessor. The best thing we found was to go on line to County Property and check the sale of properties in your neighborhood, for the YEAR they have decided to use as the starting year. We were close to 2 years behind current date. Look at the sale price for property in your area. Anything that sold for less than your assessed value, copy it. I think I copied 6 or seven properties. I took them to my appointment and showed them to the assessor. Now he is overworked and way behind and seemed to welcome any evidencee that he could use to justify lowering my taxes. He looked at my stuff made some calculaation and made me a nice offer and I said I can accept that. Now, I think I should have made a counter offer and maybe did better, but I am happy.
My tax bill was adjusted significantly. Worked for me and some other folks I know. I think the adjusters like to see evidence. I picked the properties that helped my case.

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